On Tuesday, January 22, international oil prices fell under pressure. Brent crude futures dropped 1.1%, settling at $79.29 per barrel. The February settlement contract for U.S. crude fell 2.6% to $75.89, while the March contract saw a slightly smaller decline, closing at $75.83 per barrel. Due to a public holiday, the U.S. crude market did not settle the previous day.
U.S. Energy Policy Raises Market Concerns
On his first day in office, U.S. President Trump declared a national energy emergency, sparking worries about increased U.S. production. Analysts believe that U.S. oil production is at a record high, and with OPEC+ continuing a daily reduction of 5.86 million barrels, the core issue in the global oil market is insufficient demand.
Mizuho analyst Robert Yawger pointed out, "There is no shortage of oil, but a lack of demand. If refineries cut back on fuel production, they will not purchase crude oil."
Expectations of Oversupply Intensify Downward Pressure
The market generally expects that with the slowing economic activity and the advancement of the energy transition, oil consumption demand will remain weak, potentially leading to a significant oversupply in the oil market by 2025. On Tuesday, the U.S. Energy Information Administration (EIA) reiterated its forecast of a price drop in 2025 and 2026, exacerbating investor concerns.
Trump's Trade Policy Movements Affect Market
The Trump administration's tariff policies also add uncertainty to the market. Trump stated he is considering imposing a 25% tariff on goods imported from Canada and Mexico starting February 1, although he did not announce specific measures on his first day in office as promised during the campaign. Additionally, he mentioned the possibility of halting oil purchases from Venezuela.
Despite the U.S. being the second-largest buyer of Venezuelan oil and Trump's promise to replenish the strategic oil reserve, analysts are skeptical about whether this policy can effectively boost oil demand. The Trump administration's energy policies are profoundly impacting market expectations and may lead to greater volatility in the future.
Outlook
Oil prices will continue to be influenced by global economic prospects, energy policies, and changes in market supply. In the short term, investors should pay attention to further policy details from the Trump administration and signs of a global economic recovery.
