On Thursday morning, global oil benchmarks experienced a downturn as traders focused on fresh data indicating an accumulation in U.S. crude inventories, alongside an improved geopolitical climate surrounding Greenland ownership disputes.
By 06:00 Eastern Time (11:00 GMT), benchmark Brent crude futures for March delivery were down by 1.2%, settling at $64.46 per barrel. Similarly, West Texas Intermediate (WTI) crude futures mirrored this drop, decreasing by 1.2% to $59.88 per barrel.
This recent pullback followed a modest rally over the prior two sessions, which had been propelled by concerns about supply constraints after Kazakhstan, a member of the OPEC+ coalition, suspended oil production at the Tengiz and Korolev fields starting Sunday.
Easing of Greenland Tariff Threats
Market sentiment gained some relief after U.S. President Donald Trump took a softer approach on Wednesday regarding the disputed Greenland territory. He retreated from prior threats to impose tariffs on European countries as leverage in the territorial discussion, explicitly ruling out the prospect of military action and indicating that a framework for a potential agreement is emerging.
This de-escalation mitigated worries about an abrupt intensification in U.S.-European Union tensions, which would have potentially dampened global economic growth and energy demand. Although this development stabilized broader risk appetite, oil market participants remained cautious due to contradictory signals from both supply and demand fronts.
U.S. Crude Inventory Expansion
Inventory reports released by the American Petroleum Institute showed a further accumulation in U.S. crude stockpiles of 3.04 million barrels for the week ending January 16, following a prior week's increase of over 5 million barrels.
Gasoline inventories grew by 6.21 million barrels, indicative of weakening demand within the largest energy consumer market. In contrast, stocks of distillates, which include diesel and heating oil, experienced a slight decline of 33,000 barrels.
Demand Outlook and Market Implications
On the demand side, oil prices found some underpinnings when the International Energy Agency revised upward its forecast for global oil demand growth in 2026. The agency raised its estimate from 860,000 barrels per day to 930,000 barrels per day, citing expectations of more normalized economic conditions alongside lower oil prices.
Despite this forecast, the IEA continues to anticipate a substantial market surplus through 2026, underscoring persistent imbalances in the global oil market.
Overall, the interplay of geopolitical developments, inventory trends, and shifting demand estimates continues to inject a degree of uncertainty into oil market dynamics, influencing decisions across energy, industrials, and financial sectors.