Oil prices witnessed a slight decline on Thursday, continuing a recent trend as traders prepared for increased U.S. production under President Donald Trump, while also anticipating further data regarding U.S. inventories.
Crude prices have dropped from a near six-month high in the past week, largely due to the uncertainty surrounding Trump’s energy and trade policies. Additionally, the recent signing of a ceasefire between Israel and Hamas has diminished some of the risk premium associated with crude oil.
However, the overall losses in the oil market were somewhat mitigated by expectations of heightened heating demand, prompted by a polar vortex that triggered cold weather in both the U.S. and Europe. Recent U.S. sanctions against Russia also provided support for oil prices, with the prospect of tighter supplies on the horizon.
Brent oil futures set to expire in March fell by 0.3 percent, reaching $78.80 per barrel, while West Texas Intermediate crude futures dropped by 0.2 percent, settling at $75.27 per barrel by 20:21 ET (01:21 GMT).
Read more: Oil prices dip to $79.24 amid Trump’s push for increased energy production
U.S. inventories seen increasing after five weeks of draws – API
Data from the American Petroleum Institute revealed on Wednesday that U.S. inventories rose by 1 million barrels in the week leading up to January 17, following five consecutive weeks of draws.
Typically, the API data signals a similar trend in official inventory data, which is expected to be released later on Thursday. A Reuters poll indicated that analysts anticipate a reduction in oil inventories for the past week, although product inventories are likely to see an increase.
Cold weather in the U.S. has driven up demand for heating, while also disrupting crude production in the Gulf of Mexico. This has also affected travel across large regions of the country, particularly during the holiday season at the year’s end.
Trump policies impact on oil prices: Energy and trade policies in focus
President Trump has been a significant factor influencing oil prices this week, having declared a national energy emergency and pledging to significantly increase energy production in the upcoming months.
He has advocated for higher oil production while also reversing several climate-related restrictions on the energy sector, likely in an effort to reduce energy prices and keep inflation under control.
With U.S. production already averaging record highs of 13 million barrels per day in 2024, a further increase is expected to loosen oil supplies, offsetting declines in output from other regions, particularly within the Organization of Petroleum Exporting Countries (OPEC).
Concerns surrounding Trump’s trade policies also loom large, especially with his threats to impose tariffs on several major economies, specifically China, Canada, and Mexico.
Any additional economic pressure on China, the world’s leading oil importer, is anticipated to further dampen its demand for crude oil.
