Oil prices rose on Wednesday as tightening supplies from Russia and OPEC members, coupled with declining U.S. crude oil inventories, spurred market optimism. Brent crude increased by $0.69, or 0.90%, to $77.74 a barrel, while U.S. West Texas Intermediate (WTI) climbed $0.87, or 1.17%, to $75.12 by 0954 GMT.
The Organization of the Petroleum Exporting Countries (OPEC) saw its production decline in December, breaking a two-month streak of increases. This drop was attributed to field maintenance in the United Arab Emirates, which offset gains from Nigeria and other member states. In Russia, crude output averaged 8.971 million barrels per day in December, falling short of the country’s target, according to Bloomberg.
Market analysts linked the price surge to reduced seaborne exports from Russia’s western ports, which have been declining since their October 2024 peak. “The buoyancy in oil prices comes against a background of reportedly lower crude exports out of Russia,” remarked Harry Tchilinguirian, head of research at Onyx Capital Group.
Adding to the optimism, the American Petroleum Institute (API) reported a drawdown of 4 million barrels in U.S. crude inventories last week, even as gasoline and distillate stockpiles increased. Analysts viewed this as a sign of strong demand resilience.
Economic activity also played a role, with an unexpected rise in U.S. job openings fueling hopes of greater oil consumption. Tamas Varga, an analyst at PVM, noted that weather-related disruptions, potential sanctions on Russia, and expectations of a rebound in Chinese demand were supporting the upward momentum in oil prices.
Despite the current gains, analysts predict oil prices to average lower in 2025 than in 2024, driven by anticipated production increases from non-OPEC countries. BMI, a division of Fitch Group, maintained its forecast for Brent crude to average $76 per barrel in 2025, down from $80 in 2024.
The market remains cautiously optimistic, balancing immediate supply challenges against broader macroeconomic factors and evolving geopolitical dynamics.
