Crude Oil Futures Rise as API Reports Drop in US Inventories

Crude oil futures saw an increase in trading on the morning of January 15, 2025, following a report by the American Petroleum Institute (API) that revealed a decrease in US crude oil inventories. The data showed a decline of 2.6 million barrels for the week ending January 10, which contributed to the upward movement in oil prices.

Current Oil Prices

At 9:58 AM on Wednesday, March Brent oil futures were priced at $80.14, reflecting a rise of 0.28 percent. Similarly, March crude oil futures for West Texas Intermediate (WTI) traded at $76.66, up by 0.38 percent. Despite this, January crude oil futures on the Multi Commodity Exchange (MCX) witnessed a slight drop, trading at ₹6729, down by 0.10 percent from the previous close.

Market Overview and Inventory Effects

The API indicated that Cushing crude oil stocks had increased by 600,000 barrels, which remains historically low. Additionally, gasoline and distillate stockpiles rose by 5.4 million barrels and 4.9 million barrels, respectively. Analysts from ING noted that the recent API numbers have shown that US crude oil inventories fell more than expected, supporting the rise in oil prices observed in early Asian trading.

On January 14, oil prices suffered a decline, with ICE Brent falling 1.35 percent to settle below $80 a barrel. This drop was attributed to reports suggesting a potential ceasefire between Israel and Hamas. This was the first significant daily decrease since the strict sanctions against the Russian energy sector were announced.

As the situation regarding sanctions evolves, the consequences on oil flows remain uncertain. Buyers of Russian oil are actively exploring alternative sources to mitigate potential disruptions caused by these sanctions. Experts suggest that any substantial impacts are likely to be temporary, as Russia may adapt to circumvent these restrictions. The unpredictable nature of these sanctions may provide stronger support for oil prices than previously anticipated as we move through the first quarter of the year.

Future Price Forecasts

The US Energy Information Administration (EIA) has projected a downward trend in oil prices over the next two years, anticipating that global oil production will outpace demand. They expect the average price of Brent crude oil to be $74 a barrel in 2025, which represents an 8 percent decrease from 2024, followed by an 11 percent drop to $66 a barrel in 2026.

The EIA also indicated that the easing of OPEC+ production cuts, combined with robust growth in oil production outside of this group, would contribute to the surge in global oil supply. Furthermore, global oil consumption growth is expected to remain below pre-pandemic levels.

Other Commodity Trends

Meanwhile, on the MCX, January natural gas futures were trading lower at ₹337.60, down by 3.07 percent. In addition, January dhaniya and jeera contracts on the National Commodities and Derivatives Exchange (NCDEX) also showed declines, trading at ₹7,526 and ₹22,900, down by 0.71 percent and 0.67 percent, respectively.

Oil, Futures, Market