US Crude Inventory Rise, OPEC+ Outlook, and Tariff Uncertainty Impacting Global Markets

Key Highlights

1. Crude Oil Prices Stable Amid Inventory Build
   • Brent at $75.53 (-0.11%), WTI at $72.61 (-0.01%), MCX February futures at ₹6,297 (+0.05%).
2. US Crude Inventories Rise by 3.5 Million Barrels
   • Stockpiles remain 6% below the five-year average; gasoline and distillate fuel demand show year-on-year growth.
3. Trump’s Tariff Plans Add Market Uncertainty
   • Proposed tariffs on Canadian and Mexican crude could impact North American oil trade.
4. OPEC+ Meeting to Address US Production Strategy
   • Members to discuss potential response to rising US output and potential price war concerns.

Crude Prices Steady Despite US Inventory Surge

• Crude oil futures remained steady on Thursday morning as official data showed an increase in inventories in the US for the week ending January 24.
• At 9:56 am on Thursday, April Brent oil futures were at $75.53, down by 0.11%, and March crude oil futures on WTI (West Texas Intermediate) were at $72.61, down by 0.01%. 
• February crude oil futures were trading at ₹6297 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday, against the previous close of ₹6294, up by 0.05%. 
• March futures were trading at ₹6263 against the previous close of ₹6261, up by 0.03%.

Rising US Fuel Demand Supports Market Outlook

• According to the US EIA (Energy Information Administration), commercial crude oil inventories in the US increased by 3.5 million barrels for the week ending January 24. At 415.1 million barrels, US crude oil inventories were about 6% below the five-year average for this time of year.
• Total motor gasoline inventories increased by 3 million barrels from last week and were slightly below the five-year average for this time of year. Finished gasoline inventories and blending components inventories increased last week.
• Total products supplied in the US over the last four-week period averaged 20.3 million barrels a day, up by 2.5% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.3 million barrels a day, up by 1.8% from the same period last year.
• Distillate fuel product supplied averaged 3.9 million barrels a day over the past four weeks, up by 6.9% from the same period last year. Jet fuel product supplied was up 4.5% compared with the same four-week period last year.
• US crude oil imports averaged 6.4 million barrels a day last week, a decrease of 297,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels a day, 3.6% more than the same four-week period last year.
• Meanwhile, the US Federal Reserve left interest rates unchanged at 4.25-4.5% on Wednesday. Jerome Powell, Fed Chair, said there would be no rush to cut the rates again until data showed a renewed decline in inflation or rising risks in the job market.

Trump’s Tariff Threats Loom Over North American Oil Trade

• Trump still plans to make good on his promise to impose tariffs on Canada and Mexico on Saturday, White House spokeswoman Karoline Leavitt told reporters on Tuesday.
• Trump's nominee to run the Commerce Department, Howard Lutnick, said on Wednesday that Canada and Mexico can avoid the tariffs if they act swiftly to close their borders to fentanyl, while vowing to slow China's advancement in artificial intelligence.
• On the demand front, crude oil stockpiles in the U.S. rose by 3.46 million barrels last week, roughly in line with analysts' estimate for a rise of 3.19 million barrels, as winter storms that swept the country last week hit demand.
• On the supply side, crude oil exports from Russia's western ports in February are set to fall by 8% from the January plan as Moscow boosts refining, traders said, and Reuters calculations showed, after the latest U.S. sanctions squeezed crude exports.
• Investors are also looking ahead to a ministerial meeting by the Organization of the Petroleum Exporting Countries and its allies, together called OPEC+, scheduled for Feb. 3.
• The OPEC+ group of leading oil producers is set to discuss Trump's efforts to raise U.S. oil production and take a joint stance on the matter, Kazakhstan said on Wednesday. Russia is also a member of the OPEC+ group.

Expert Opinion: OPEC+ Prepares Response to US Production Strategy

• A price war with the U.S. would involve OPEC+ producers maximizing their output to undercut prices and drive shale production into decline. Brent crude oil prices may fall below $50 as OPEC+ can deploy over 5 million barrels of oil per day in its spare capacity, prompting a fall in U.S. shale oil production along with prices.
• Oil prices were little changed on Thursday as markets braced for the threatened tariffs by U.S. President Donald Trump on Mexico and Canada, the two largest suppliers of crude oil to the United States, and awaited a meeting of OPEC+ producers.