Crude Oil Futures Rise Following API Data Release on US Inventories

Crude oil futures saw an increase on Wednesday morning, buoyed by a report from the American Petroleum Institute (API) which showed a notable decline in US inventories for the week ending January 10. Initial trading figures indicated that March Brent oil futures rose to $80.14, an uptick of 0.28 percent, while March West Texas Intermediate (WTI) crude oil futures climbed to $76.66, marking a 0.38 percent increase.

Specifically, January crude oil futures were trading at ₹6729 on the Multi Commodity Exchange (MCX), a slight decrease of 0.10 percent from the previous close of ₹6736.

The API's report highlighted a reduction of 2.6 million barrels in crude oil inventories, contributing to a firmer trading environment across oil markets. Notably, stocks at Cushing increased by 600,000 barrels; however, they remained comparatively low historically. Additionally, gasoline and distillate product inventories experienced increases, with gasoline up by 5.4 million barrels and distillates rising by 4.9 million barrels, according to ING Think’s Commodities Feed.

Previously, oil prices faced pressure, with a notable decline on Tuesday due to broader market dynamics, including reports of a potential ceasefire between Israel and Hamas, which resulted in ICE Brent dropping by 1.35 percent to settle under $80.

Looking ahead, the impact of ongoing sanctions against the Russian energy sector remains uncertain. These sanctions have prompted many buyers of Russian oil to explore alternative sources in the event of major disruptions. Experts suggest that any immediate impact may be brief, as Russia is expected to find ways to navigate around these sanctions. Consequently, this uncertainty is likely to provide underlying support to oil prices against initial forecasts.

The US Energy Information Administration (EIA) recently released its January short-term energy outlook, projecting downward pressure on oil prices over the next two years due to an anticipated increase in global oil production surpassing demand growth. The forecast suggests that Brent crude oil prices may average $74 a barrel in 2025, reflecting an 8 percent drop compared to 2024, with further declines expected to $66 a barrel by 2026.

The EIA noted that the unwinding of OPEC+ production cuts coupled with robust production growth outside of OPEC+ would contribute to increased global oil supply, while consumption growth is expected to lag behind pre-pandemic levels.

In other commodities, January natural gas futures were trading around ₹337.60 on the MCX, down 3.07 percent from the previous session close. January dhaniya contracts on the National Commodities and Derivatives Exchange (NCDEX) were also down, trading at ₹7,526 against a previous close of ₹7,580, reflecting a decline of 0.71 percent.

Similarly, January jeera futures lost value, trading at ₹22,900 after closing at ₹23,055 the previous session, indicating a decrease of 0.67 percent.

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