Oil prices climbed during Asian trading on Thursday, following data indicating a decline in U.S. oil inventories last week. However, traders adopted a cautious approach as they assessed the outlook for the new year.
As of 20:39 ET (01:39 GMT), Brent Oil Futures gained 0.7%, reaching $75.13 per barrel, while Crude Oil WTI Futures for February delivery rose 0.7% to $71.75 per barrel.
After experiencing a modest annual decline in 2024, the oil market entered 2025 with hesitancy, bracing for a potentially oversupplied environment.
API Reports a Drop in U.S. Oil Inventories
The American Petroleum Institute reported a 1.4-million-barrel decline in U.S. oil inventories last week.
A decrease in oil inventories often signals higher demand for crude, which can support price increases. Lower stockpiles may prompt traders to re-enter the oil market, pushing prices upward.
The U.S. Energy Information Administration (EIA), a key statistical agency under the Department of Energy, is expected to release its official inventory data later on Thursday. These figures are anticipated to confirm the decline, offering critical insights into U.S. crude supply-demand dynamics and influencing market pricing strategies.
Oil Market Faces Oversupply Concerns in 2025
Despite the inventory decline, U.S. oil production remains near record highs. With the incoming Donald Trump administration expected to prioritize policies favoring increased domestic fossil fuel production, the market could face heightened supply pressures.
The International Energy Agency (IEA) recently projected that the oil market would remain well-supplied, even as global demand is forecasted to grow in 2025.
The demand outlook is closely tied to China’s economic recovery, as the world’s largest oil importer works to implement growth-oriented policies. In his New Year’s address, Chinese President Xi Jinping emphasized plans for more proactive measures to bolster economic growth in 2025.
However, traders remain cautious as concerns over rising supply and sluggish demand recovery weigh on market sentiment, creating an uncertain balance for the year ahead.
