Oil Prices Steady Amid U.S. Stockpile Decline and Demand Concerns

SINGAPORE (Reuters) - On Wednesday, oil prices remained relatively unchanged after a drop the previous day. A decrease in U.S. stockpiles and expectations of potential supply disturbances due to sanctions on Russian tankers provided some support to the market, despite predictions of lower global fuel demand.

As of 02:05 GMT, Brent futures were trading up by 2 cents at $79.94 a barrel, recovering slightly after falling by 1.4% in the previous session. Meanwhile, U.S. West Texas Intermediate (WTI) crude saw a modest increase of 12 cents, or 0.15%, reaching $77.62 a barrel following a 1.6% decline.

Tuesday’s market slump was attributed to predictions from the U.S. Energy Information Administration (EIA) indicating that oil prices are likely to face downward pressure over the next two years, primarily because supply is expected to outstrip demand.

However, early Wednesday trading found a boost from reports indicating a reduction in crude stockpiles in the U.S., which is the world’s largest oil consumer. The American Petroleum Institute (API) released data late Tuesday showing that stockpiles had decreased, along with prospects of supply interruptions after the U.S. Treasury imposed sanctions on Russian oil producers and their so-called shadow fleet of vessels.

According to analysts at ING, "Oil prices are trading firmer in the early morning trading in Asia today after API numbers showed that U.S. crude oil inventories fell more than expected over the last week." They noted that while inventories at the key storage hub in Cushing, Oklahoma, increased by 600,000 barrels, the overall stock levels remain historically low. Cushing serves as the delivery point for WTI futures contracts.

The API indicated that U.S. crude oil stocks fell by 2.6 million barrels during the week ending on January 10, according to market sources referencing API data. Meanwhile, gasoline inventories experienced a rise of 5.4 million barrels, while distillate stocks increased by 4.88 million barrels.

A Reuters poll previously suggested that U.S. crude oil inventories had dropped by about 1 million barrels for the week ending January 10, setting the stage for an impending report from the EIA, which is scheduled to be released at 10:30 a.m. EST (15:30 GMT) on Wednesday.

The EIA’s report is anticipating that Brent crude prices will decline by 8%, averaging $74 per barrel in 2025, and further decrease to $66 per barrel in 2026. For WTI, the average price is forecasted to be $70 in 2025, eventually dropping to $62 the following year.

Global demand for oil is expected to average 104.1 million barrels per day in 2025, a reduction from the previous estimate of 104.3 million bpd. The EIA's forecasts suggest that supply of oil and liquid fuels is expected to average 104.4 million bpd in the same year.

Oil, Market, Demand