Oil Retreats from 5-Month Highs

• West Texas Intermediate (WTI) fell 1.5%, dropping below $79 per barrel after a strong rally earlier this week.

Market Adjusts to Russian Crude Sanctions

• Traders brace for potential easing of sanctions under President-elect Donald Trump’s administration, potentially benefiting Russian oil producers.
• Saudi Aramco received requests for an additional 750,000 barrels per day from Indian and Chinese buyers, signaling a reshuffling of global oil flows.

Inventory Decline Signals Tightening Supply

• US crude inventories dropped for the 8th consecutive week, hitting their lowest levels since April 2022.
• WTI prompt spread rose above $1 per barrel, suggesting tighter market conditions.

Geopolitical Influences Remain Key

• A Gaza ceasefire agreement between Israel and Hamas may reduce Middle East tensions temporarily but had limited impact on crude markets.

Trump’s Inauguration Fuels Uncertainty

• Speculation grows about Trump’s energy policies, including potential tariffs on Canadian oil and measures to boost US domestic production. 

Cold Weather Bolsters Demand

• A surge in heating fuel demand due to North American cold weather supports prices, testing predictions of weaker oil markets in 2025.

What’s next?

• The current developments in the oil market reflect a dynamic interplay of geopolitical, policy-driven, and seasonal factors. While sanctions on Russian crude and declining U.S. inventories highlight tightening supply conditions, the uncertainty surrounding President-elect Donald
• Trump’s potential policy shifts introduces significant speculation. Easing sanctions on Russian oil producers or implementing tariffs on Canadian imports could reshape global supply chains, potentially creating new trade flows and market dynamics.