Crude Oil Rebounds as US Stockpiles Fall and OPEC Production Declines

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Oil prices saw a rise in Asian trading on Wednesday, continuing the rebound from the previous session, as U.S. industry data indicated a significant drop in oil inventories, and OPEC's production was observed to decline.

The prices strengthened this week, buoyed by ongoing signs of resilience in the U.S. economy, with traders anticipating that cold weather in both the U.S. and Europe will increase demand for oil.

Brent crude futures for March rose by 0.5% to $77.41 per barrel, while West Texas Intermediate (WTI) crude futures also gained 0.5%, reaching $73.97 per barrel by 20:37 ET (01:37 GMT). Both benchmarks were approaching their highest levels since mid-October.

According to data from the American Petroleum Institute (API), U.S. oil inventories decreased by more than 4 million barrels during the week ending January 3, far surpassing the expected decline of 250,000 barrels.

This marked the second consecutive week of inventory reductions, with increased travel during the holiday season and cold weather linked to a polar vortex likely driving up demand for heating oil and other distillates.

The API data often anticipates a similar trend in the official government inventory report, which is expected later on Wednesday. Shrinking U.S. inventories point to tightening oil supplies and robust demand within the country.

In December, oil production by OPEC countries saw a decline, with maintenance activity in the United Arab Emirates offsetting an increase in production in Nigeria.

Additionally, data from Bloomberg showed that Russia's oil output fell below its target of 8.978 million barrels per day in December.

OPEC and its allies had previously planned to begin increasing oil production by at least the second quarter of 2025, driven by persistent weaknesses in oil prices.

Concerns about slowing demand in China and strong oil production outside OPEC, along with the recent strengthening of the dollar, had pressured oil prices earlier. As a result, oil prices saw a loss of about 3% in 2024.

 

 

 

 

 

 

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