By Paul Carsten
LONDON (Reuters) -Oil prices steadied on Thursday a day after settling at multi-month highs on the latest U.S. sanctions on Russia and a larger-than-forecast fall in U.S. crude stocks.
Brent crude futures were down 23 cents, or 0.3%, to $81.80 per barrel by 0915 GMT, after rising 2.6% in the previous session to their highest since July 26 last year.
U.S. West Texas Intermediate crude futures slid 16 cents, or 0.2%, to $79.88 a barrel, after gaining 3.3% on Wednesday to their highest since July 19.
U.S. crude oil stocks fell last week to their lowest since April 2022 as exports rose and imports fell, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
The 2 million-barrel draw was more than the 992,000-barrel decline analysts had expected in a Reuters poll.
The drop added to a tightened global supply outlook after the U.S. imposed broader sanctions on Russian oil producers and tankers. The sanctions have sent Moscow’s top customers scouring the globe for replacement barrels, while shipping rates have surged too.
The Biden administration on Wednesday imposed hundreds of additional sanctions targeting Russia’s military industrial base and evasion schemes.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, which collectively as OPEC+ have been curtailing output over the past two years, are likely to be cautious about increasing supply despite the recent price rally, said Commodity Context founder Rory Johnston.
“The producer group has had its optimism dashed so frequently over the past year that it is likely to err on the side of caution before beginning the cut-easing process,” Johnston said.
Limiting oil’s gains, Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners, according to an official.
On the demand front, global oil expanded by 1.2 million barrels per day in the first two weeks in 2025 from the same period a year earlier, slightly below expectations, JPMorgan analysts wrote in a note.
The analysts expect oil demand to grow by 1.4 million bpd year on year in coming weeks, driven by heightened travel activities in India, where a huge festival gathering is taking place, as well as by travel for Lunar New Year celebrations in China at the end of January.
Some investors are also eying potential interest rate cuts by the U.S. Federal Reserve in 2025 following data on an easing in core U.S. inflation – which could lend support to economic activities and energy consumption.
This post is originally published on INVESTING.
