On Wednesday, oil prices were steady amid mixed cues on the global supply and demand for crude, while inventory data from the US was in sight.
In the Asian afternoon session, Brent futures for March delivery rose by 0.45% to $79.84. The US West Texas Intermediate (WTI) futures increased by 0.48% to $74.63 a barrel.
The two contracts were trying to recover from a sluggish beginning this year amid continued concerns over the economic slowdown impacting oil demand. Oil prices declined 10% in 2023 due to worries about slightly lax markets and weaker demand.
Certain US oil production capacity resumed after winter disruptions, while Libya’s largest oilfield also returned to operating earlier this week. Additionally, official data revealed a rise in Norwegian crude output.
The trend signaled higher oil supply in the near term, but ongoing fears over intensifying tensions in the Middle East slightly offset the prospect. The Israel-Hamas conflict persisted, and the US and UK’s fight against the Houthis in Yemen and the Red Sea continued.
The conflicting signals led crude prices to a tight range this week, preventing a break above $80 per barrel for Brent.
Meanwhile, weak data from China, the world’s leading oil importer, sparked a massive debate in crude markets following the country’s disappointing fourth-quarter gross domestic product (GDP) reading.
Traders will now focus on purchasing managers’ index (PMI) data from major economies this week to assess the state of economic activity in January.
API Inventory Data Provide Mixed Cues
The American Petroleum Institute (API) reported that US crude inventories were down 6.7 million barrels in the week ending January 19 due to extreme cold conditions disrupting production.
However, the API reading indicated a continued rise in gasoline stocks and a slight fall in distillate inventories, suggesting ongoing weakness in the demand in the largest fuel-consuming nation as the winter weather also hindered travel in the US.
Gasoline inventories in the country experienced significant increases every week in 2024, signaling a substantial drop in fuel demand amid worsening travel conditions. US gasoline futures stayed near their two-year lows.
The API data typically presents similar numbers from official inventory figures, set to be released later in the day. Analysts anticipate a 3 million barrel decline in oil inventories, while gasoline supplies were projected to rise by 2.2 million barrels.
