Crude Oil Prices Under Pressure Amid Rising US Inventories and Global Economic Uncertainty

Key Highlights

1. Price Trends: March Brent oil futures fell by 0.33% to $78.74, while WTI futures dropped by 0.29% to $75.22.
2. Inventory Growth: The API reported a 1 million-barrel increase in US crude oil inventories, ending a five-week streak of declines.
3. Geopolitical Factors: President Trump’s proposed tariffs on multiple nations could impact global demand for crude oil.
4. Market Sentiment: Oversupply concerns persist due to OPEC+ production pressure and weak demand recovery

Crude Oil Prices Dip Amid Rising US Inventories

• On Thursday, March Brent oil futures were at $78.74, down by 0.33 per cent, and March crude oil futures on WTI were at $75.22, down by 0.29 per cent
• Crude oil futures traded lower on Thursday morning after an industry report showed an increase in inventories in the US.
• February crude oil futures were trading at ₹6513 on Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹6561, down by 0.73 per cent, and March futures were trading at ₹6472 against the previous close of ₹6516, down by 0.68 per cent.

Demand & Supply: API Reports First Inventory Build in Five Weeks

• Latest data by the industry body American Petroleum Institute (API) showed an increase of 1 million barrels of crude oil inventories in the US for the week ending January 17. This is the first increase in crude oil inventories after five weeks of continuous decline in inventories. 
• Official data from the US EIA (Energy Information Administration) is expected later on Thursday. EIA data will give a clear picture on the crude oil inventory levels in the US for the week ending January 17. 
• Market players are also analysing the potential impacts of the decision to impose tariffs on several nations by the US President, Donald Trump. They feel that such moves could impact the global economy. This in turn could impact the demand for commodities such as crude oil. 
• This is especially true con­sidering OPEC+’s ongoing pressure to increase production, which could lead to prolonged suppression of price levels. However, any moves by the U.S. to restore or even increase export levels, or to secure new trade agreements with key oil producers, could provide up­ward momentum for prices.
• From the demand side, the global economic slowdown and the uncertain economic recov­ery path in China may limit price increases in the medium to long term.

Petroleum News: Weak Recovery Continue to Pressure the Market

• In the short term, the direc­tion of the Trump administra­tion’s policies may play a dom­inant role in the oil market’s trajectory.
• As more details emerge re­garding energy production and trade agreements, traders will assess the balance between eco­nomic growth, energy security, and policy risks.
• Given the unchanged expec­tation of oversupply in the oil market, crude oil will continue to face pressure.
• The reaction of Brent futures around the 200-day moving aver­age and near the $75.8 level will be worth monitoring.

Expert Opinion: Brent Faces Key Resistance as Traders Eye Policy Moves

• The dated Brent price is set by the cheapest of the six crudes and Midland, the largest of the six streams, often plays a role in setting its value. The other five are North Sea crudes. 
• Oil is still higher this year after a strong start, following sinking temperatures in the Northern Hemisphere that increased heating demand and as US sanctions on Russia’s oil industry upended markets. India has widened its backing for Russian insurers as it strives to keep the discounted barrels flowing.