Oil prices kicked off the new year on a positive note, driven by reports of decreasing US crude stockpiles, signaling potential market shifts.
Bloomberg: Oil prices are starting the new year on a high note. Reports indicate that US crude stockpiles are continuing to drop, which is good news for the market.
West Texas Intermediate has been on a roll, rising for the fourth session in a row and hovering around $72 a barrel. This comes after the American Petroleum Institute reported a decrease of 1.4 million barrels in nationwide inventories last week. If the government confirms this later, it would mark six weeks of declines.
Since mid-October, oil prices have been pretty stable. WTI ended 2024 without much change, while Brent saw a slight dip after closing below $75 a barrel recently. Investors are a bit anxious about a potential oversupply this year, especially with the uncertainty surrounding Donald Trump’s second presidential term.
According to Robert Rennie from Westpac Banking Corp, the outlook for Brent is looking up in the first quarter, with prices possibly pushing into the $75 to $80 range. However, the second half of the year might bring challenges with rising supply and weak demand.
Ongoing conflicts in the Middle East and Ukraine could also impact oil prices. Any escalation in these areas might provide some short-term support. Plus, new sanctions affecting Iranian and Russian shipments could lead to increased demand for oil from other regions.
China’s economic recovery is still a bit shaky, but there are signs of improvement. However, the growing popularity of new energy vehicles is starting to cut into gasoline demand.
