Oil prices rise amid supply concerns over Russian sanctions

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By MG News | January 15, 2025 at 03:26 PM GMT+05:00

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January 15, 2025 (MLN): Oil prices rose on Wednesday trimming losses from the previous day, as the focus turned back to potential supply disruptions from sanctions on Russian tankers, though gains were capped as the market awaited more clarity on their impact.

Brent crude futures increased by $0.27, or 0.34%, to $80.19 per barrel.

West Texas Intermediate (WTI) crude futures rose by $0.36, or 0.46%, to $77.86 per barrel by [3:15 pm] PST. 

Prices slipped on Tuesday after the U.S. Energy Information Administration predicted oil would come under pressure over the next two years as supply would outpace demand, as Reuters reported.

"The dominant driver has been all about the Russian oil sanctions lately, compounded by a streak of stronger U.S. economic data," said Yeap Jun Rong, market strategist at IG.

"The key question remains on how much Russian supply will be lost in the global market and whether alternative measures can offset the shortfall," said Yeap.

He added that in the near term, oil may give up some of its sharp gains from the past week.

The market also found some support on Wednesday from a drop in crude stockpiles in the U.S., the world's biggest oil consumer, reported by the American Petroleum Institute late on Tuesday.

"Oil prices are trading firmer in early morning trading in Asia today after API numbers showed that U.S. crude oil inventories fell more than expected over the last week," said ING analysts.

The analysts added that while crude oil stocks in the country's flagship storage hub Cushing, Oklahoma, increased by 600,000 barrels, inventories were still historically low.

Cushing is the delivery location for WTI futures contracts.

The API reported U.S. crude oil stocks fell by 2.6 million barrels in the week ended Jan. 10, according to market sources citing the API figures.

They added that gasoline inventories rose by 5.4mn barrels while distillate stocks climbed by 4.88mn barrels.

A Reuters poll showed analysts expected U.S. crude oil stockpiles fell by about 1mn barrels in the week to Jan. 10.

Stockpile data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 10:30 a.m. EST (1530 GMT).

On Tuesday, the EIA trimmed its outlook for global demand in 2025 to 104.1mn barrels per day, while expecting supply of oil and liquid fuel to average 104.4mn bpd.

It predicted Brent prices would fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026, while WTI would average $70 in 2025 and fall to $62 next year.

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