Oil Falls as Early Year Gains Fade
Oil fell slightly after a volatile session, as traders weighed whether gains since the turn of the new year were too rapid, and as data from top importer China highlighted economic challenges.
Brent fell below $76 a barrel, after ending more than 1% lower on Wednesday even as U.S. data showed crude holdings at the key Cushing, Oklahoma, hub hit their lowest since 2014. West Texas Intermediate was also weaker.
China’s consumer inflation fell further toward zero, figures showed on Thursday, a setback for the government’s efforts to boost demand by injecting stimulus. Factory deflation continued for a 27th month.
Oil has made a strong start to 2025, despite widespread concerns that prices will struggle this year given expectations for a global supply glut. The rally — which took Brent to its highest since mid-October on Wednesday — has been driven by falling U.S. inventories, lower supply from Russia and concerns that President-elect Donald Trump may be willing to cash in when he takes office.
“I expect this volatility to continue until the inauguration,” said Wayne Gordon, regional chief investment officer at UBS Group AG, referring to the Jan. 20 handover. “The only thing we know is that he’s unpredictable.”
Trump’s trade and security agenda could affect global oil markets. He has vowed to impose tariffs on all Canadian imports, potentially including crude shipments, while in the Middle East, his administration is also expected to tighten sanctions on Iranian flows.
In response, Canadian Energy Minister Jonathan Wilkinson warned against an oil trade war, saying retaliation is not out of the question. U.S. Midwest refineries are gearing up for heavy crude, which Canada supplies, he said.
Source: Bloomberg
