Oil Rises as IEA Sees Smaller Surplus This Year on Supply Risks
Oil rose as US sanctions against Russian crude continued to reverberate through the market and the International Energy Agency dialed back its bearish view for the year.
West Texas Intermediate climbed 1.8% to just below $79 a barrel. Futures received some support from US consumer price data that was slower than expected, which weighed on the dollar and boosted equity markets.
Global oil markets face a smaller surplus this year than previously expected, the IEA said, with inventories set to grow by 725,000 barrels a day in 2025. The agency also fractionally increased global consumption estimates.
Elsewhere, US crude stockpiles dropped 1.96 million barrels last week, the eighth straight decline, according to US government data. Inventories rose at the key storage hub in Cushing, Oklahoma, and gasoline stockpiles also gained.
The latest US sanctions are rippling through markets. Buyers of Russian oil are increasingly turning to other OPEC+ suppliers as nations including India said they would bar sanctioned tankers.
In China, state oil companies and large private refiners have been snapping up cargoes from the Middle East and elsewhere in preparation for disruption. Freight costs have surged, while US physical pricing patterns have also shifted.
Crude has seen a strong start to the year, with the latest US sanctions adding to gains driven by a colder Northern-Hemisphere winter sending heating demand higher, and the steady fall in US stockpiles. The early advance runs counter to widespread expectations that prices would struggle in 2025 as supplies were projected to run ahead of demand, driving a global surplus.
The US Energy Information Administration’s latest report on Tuesday signaled oversupply in 2025 and 2026, although estimates were produced before the latest sanctions against Russia.
Traders are also weighing the implications of President-elect Donald Trump’s second term in the White House. These include the possibility of tighter curbs on Iranian exports, potential tariffs that could ensnare Canadian oil, as well as moves to encourage domestic production.
WTI for February delivery was up 2% at $78.98 a barrel as of 10:39 a.m. in New York. Brent for March settlement was 1.1% higher at $81.01 a barrel.
Source : Bloomberg
