Oil prices remained largely unchanged on Thursday as investors balanced robust winter fuel demand expectations against growing U.S. fuel inventories and broader macroeconomic concerns.
By 1003 GMT, Brent crude futures were trading down 3 cents at $76.13 per barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 10 cents to $73.22. Both benchmarks had declined over 1% on Wednesday due to a stronger dollar and an unexpected rise in U.S. fuel stockpiles.
“The oil market continues to face conflicting dynamics – seasonal demand providing support for bulls, contrasted with macroeconomic data favoring a stronger U.S. dollar that could cap further gains,” said Kelvin Wong, senior market analyst at OANDA.
JPMorgan analysts forecast oil demand in January to grow by 1.4 million barrels per day (bpd) year-on-year, reaching 101.4 million bpd. This increase is largely attributed to higher consumption of heating fuels in the Northern Hemisphere and an earlier start to China’s Lunar New Year travel activities.
“Global oil demand is projected to remain strong throughout January, driven by colder-than-normal winter conditions boosting heating fuel usage and increased travel in China,” JPMorgan analysts noted.
Brent futures also signal tightening supply amid rising demand, as the premium of the front-month contract over the six-month contract hit its widest level since August. This market backwardation typically points to decreasing supply or increasing demand.
Despite these trends, U.S. Energy Information Administration (EIA) data showed higher gasoline and distillate stockpiles last week. Meanwhile, a strengthening U.S. dollar, supported by rising Treasury yields, added pressure on oil prices.
Looking ahead, WTI crude is expected to trade between $67.55 and $77.95 through February as markets await clarity on U.S. policy under the new administration and additional fiscal measures from China, Wong added.
Separately, Saudi Arabia’s crude supply to China is anticipated to decline in February after the kingdom raised its official selling prices to Asia for the first time in three months, according to trade sources.
