On Thursday, global oil prices experienced a downturn, undoing gains seen over the previous two days. The retreat followed U.S. President Donald Trump's recent reduction in aggressive rhetoric surrounding Greenland and Iran, coupled with ongoing evaluations of supply and demand conditions by investors.
At 1301 GMT, Brent crude futures fell by $1.25, or 1.92%, settling at $63.99 per barrel. Similarly, West Texas Intermediate (WTI) March contracts dropped $1.24, or 2.05%, reaching $59.38 per barrel.
Prior sessions had recorded a modest upward trajectory, with prices climbing slightly over 0.4% on Wednesday and previously rising 1.5%, driven partly by disruptions in Kazakhstan. Specifically, production at the Tengiz and Korolev oilfields halted due to problems in power distribution, supporting near-term price strength.
Ole Hansen, chief commodity analyst at Saxo Bank, noted that the market’s risk premium diminished following the de-escalation in Greenland and the lessened supply concerns related to Iran.
President Trump officially ruled out using force to acquire Greenland, stepping back from proposed tariffs against key European allies. Additionally, he expressed hope for no further military engagement in Iran while maintaining that the U.S. would act should Iran pursue nuclear weapons development.
Given this geopolitical recalibration, Tony Sycamore, an analyst from online brokerage IG, suggested oil prices are likely to stabilize in the vicinity of $60 a barrel.
Further contributing to market sentiment, Trump remarked on a possible imminent resolution to the Russia-Ukraine conflict and planned a meeting with Ukrainian President Volodymyr Zelenskiy. The cessation of hostilities could lead to the lifting of U.S. sanctions on Russia, potentially easing supply interruptions and exerting downward pressure on prices.
In its recent monthly oil market report, the International Energy Agency uplifted its global oil demand growth forecast for 2026, implying a smaller surplus for the current year. This adjustment may influence medium-term supply-demand balance assessments.
Meanwhile, U.S. crude and gasoline inventories increased last week, while distillate stocks experienced a slight decline, according to American Petroleum Institute data cited by market sources. Crude stockpiles reportedly grew by 3.04 million barrels in the week ending January 16, gasoline inventories swelled by 6.21 million barrels, and distillate supplies fell by 33,000 barrels.
Anticipating inventory changes, eight Reuters-polled analysts projected an average crude inventory rise of approximately 1.1 million barrels for the referenced week.
Yang An, an analyst at Haitong Futures, observed that the elevated crude stock levels represent a notable resistance to further price increases amid a market characterized by oversupply.