Oil prices climbed on Wednesday after the US Energy Information Administration (EIA) lowered its global surplus forecast, echoing similar revisions from the International Energy Agency.
Brent crude edged closer to $70 per barrel, while West Texas Intermediate (WTI) approached $67. The EIA sharply reduced its projections for excess supply this year and halved its expected glut for 2026, citing potential declines in oil shipments from Iran and Venezuela.
Oil Recovers Despite Market Volatility
Crude prices rebounded from early losses on Tuesday, even as escalating trade tensions under US President Donald Trump rattled broader risk assets. Oil futures have retreated from their mid-January highs due to uncertainty over tariffs, OPEC+ supply expansion plans, and sluggish demand from China.
“Market sentiment remains fragile despite today’s modest recovery,” said Yeap Jun Rong, a strategist at IG Asia. “The lack of clarity on tariff policies and ongoing concerns over US economic growth continue to weigh on investor confidence.”
US Inventory Data and Geopolitical Risks
Meanwhile, the American Petroleum Institute (API) reported a 4.2 million-barrel rise in US commercial crude inventories last week. However, a significant drawdown was recorded at Cushing, Oklahoma—the key delivery hub for WTI contracts. If confirmed by official data later on Wednesday, this would mark the first inventory reduction at the site in five weeks.
Geopolitical developments remain in focus. Ukraine has agreed to a US-brokered 30-day ceasefire with Russia, temporarily easing tensions in the three-year conflict. At the same time, the Iran-backed Houthi rebels in Yemen have vowed to resume attacks on Israeli vessels, marking a potential resurgence in Middle Eastern shipping disruptions.
With supply forecasts shifting and geopolitical risks persisting, oil markets remain volatile as investors assess the balance between production dynamics and global demand.
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