The American Petroleum Institute (API) estimated that crude oil inventories in the United fell by 4.022 million barrels for the week ending January 3. Analysts had expected a 250,000 barrel draw. For the week prior, the API reported a draw of 1.442-million-barrel in U.S. crude oil inventories in the midst of build season. In 2024, crude oil inventories dropped by more than 12 million barrels, according to the API’s inventory data. Brent crude was trading at $77.49— the same price as this time last year. U.S. WTI was trading at $74.70 at 1:30 AM est. Surprising Gasoline inventories rose this week by 7.331 million barrels after last week’s 2.163-million-barrel increase. As of last week, gasoline inventories are slightly above the five-year average for this time of year, according to the latest EIA data. Distillate inventories rose by 3.201 million barrels, after last week’s large 5.719-million-barrel increase. Distillate inventories were about 6% below the five-year average as of the week ending December 27, the latest EIA data shows. Cushing inventories—the benchmark crude stored and traded at the key delivery point for U.S. futures contracts in Cushing, Oklahoma—fell by 3.115 million barrels, according to API data, after increasing by 305,000 barrels in the previous week.
WTI Climbs as US Freeze Fuels Demand
Oil pushed higher as a cold front in the US and signs of a tighter market countered technical signals that crude’s rally may be overdone. West Texas Intermediate advanced almost 1% to settle above $74.92 a barrel, buoyed by frigid weather in the US that’s boosting demand for heating fuel and increasing the risk of freeze-offs in production areas. Adding to signs of a tighter supply-demand balance, Middle Eastern oil markets have been firmer in recent weeks as refiners in China sought alternatives to Iranian and Russian crude. At the same time Russian data show that its oil production was below its OPEC+ output target last month, another sign of limited supplies. Meanwhile in China, ports in the eastern province of Shandong, the top destination for Iranian crude, were urged to prevent US-sanctioned tankers from docking at their berths. Crude markets have witnessed a robust start to the year as a result of technical buying after prices broke out of a months long range. Still, the relative strength index shows prices are trading at overbought levels, a reading that indicates crude was due for a pullback, and many analysts continue to warn of an oversupply later in the year. “Whilst renewed strength cannot be ruled out in the immediate future should freezing temperatures persist, the sudden change in sentiment yesterday afternoon insinuates that a protracted rally will be difficult to sustain without fundamental changes in economic prospects or the global oil balance,” said Tamas Varga, an analyst at brokerage PVM.