Oil Falls Amid Supply Outlook and US Stockpiles Increase
Oil prices fell slightly on Thursday (January 22nd) after strengthening in the previous two sessions, as investors reassessed the supply-demand relationship. Additional pressure came from a report showing US crude and gasoline inventories rose last week, narrowing the room for price increases.
At 07:49 GMT, Brent was down 28 cents (0.43%) at $64.96/barrel, while the March WTI contract was down 19 cents (0.31%) at $60.43/barrel. Prices had previously risen after Kazakhstan halted production at its Tengiz and Korolev fields due to power outages.
Sentiment was also affected by geopolitical drama. Trump softened his tone regarding Greenland, asserting he would not use force and withdrawing threats of tariffs against Europe. The market viewed the easing of US-European trade tensions as positive for the global economy and oil demand. On the other hand, the Iran risk hasn't completely disappeared: Trump hopes there will be no further military action, but has confirmed the US will act if Tehran continues its nuclear program.
Amid the Greenland issue calming down and the diminishing likelihood of escalation in Iran, some analysts believe oil has the potential to remain around $60/barrel. Trump also mentioned the possibility of being "quite close" to a deal to end the Russia-Ukraine war. If the war ends, US sanctions on Russia could be eased, global supply could become more manageable, potentially putting downward pressure on prices.
From a fundamental perspective, the IEA raised its projection for global oil demand growth in 2026, meaning this year's supply surplus is expected to narrow slightly—although the market remains vulnerable if supply continues to tighten. Another key factor lies in US inventory data: market sources, citing the API, reported that crude oil stocks rose by 3.04 million barrels and gasoline stocks rose by 6.21 million barrels, while distillates fell slightly.
In essence, rising stocks and concerns about the market remaining "oversupplied" are the main brakes. As long as US inventories remain high and global supply is tight, the oil rally is likely to stall quickly—although geopolitical headlines can still cause price fluctuations at any time.
Source: Newsmaker.id
