Oil Prices Decline Amid Rising Inventory and Political Developments

Oil prices continued to fall as market attention turned to increasing stockpiles in the United States. As of 12:10 p.m. in Singapore, Brent crude for March settlement dropped by 0.3%, settling at $78.74 a barrel.

On January 23, 2025, the American Petroleum Institute (API) reported an unexpected rise in US crude inventories, marking the first increase since mid-November 2024. Specifically, the inventory rose by 1 million barrels last week, while gasoline stockpiles also surged. This trend is notable since US crude inventories generally decrease toward the end of the year due to tax strategies.

The recent decline in oil prices, which began last Thursday, has pushed Brent crude below the $79 mark, while West Texas Intermediate (WTI) hovered near $75. Observers have been watching for further developments regarding global trade relations, particularly actions and statements from President Donald Trump.

Impact of Weather and Sanctions

Despite the recent decline, oil prices have seen a strong performance in 2025 due to various factors, including frigid temperatures in the Northern Hemisphere that have driven up heating demand. Moreover, sanctions on Russia's oil industry have also created ripples in the global market, causing India to bolster support for Russian insurers to maintain the flow of discounted oil.

Market sentiment is now focused on the potential actions of the Trump administration, which has recently issued tariff threats against various countries, including China, Canada, and Mexico. Additionally, there have been cautionary signals suggesting further penalties against Russia should it fail to engage in negotiations to end the ongoing conflict in Ukraine.

Market Sentiment Towards Trump's Policies

Analysts note that while the tariff threats hold potential for market shifts, they are primarily seen as bargaining tools at this stage. Vandana Hari, founder of Vanda Insights in Singapore, commented, "The tariff threats so far are only threats. They are bargaining chips. There may be cautious optimism that Trump will nail down a rapprochement with Putin, but the market will need more tangible assurance before pricing it in."

As the market awaits official government data, scheduled to release later on Thursday, the focus remains on how these developments will influence the oil sector moving forward.

Oil, Markets, Trump