On January 9th, WTI crude oil futures for February rose 0.8%, closing at $73.92 per barrel, marking their seventh gain in the past nine trading days. This reflects the market's dual response to supply risks and increased demand triggered by cold weather. Meanwhile, Brent crude futures for March rose 1%, settling at $76.92 per barrel. The crude oil market has shown a strong start to the year, with traders balancing multiple positive factors against potential risks.
Cold Weather Boosts Demand
As winter sets in, the demand for heating oil, kerosene, and liquefied petroleum gas is expected to rise significantly in the first quarter. JPMorgan analysts have released a report stating that these factors will increase demand by 500,000 to 700,000 barrels per day. Analyst Natasha Kaneva pointed out that the severe winter conditions significantly impact energy demand, not only boosting consumption but also potentially pressuring supply.
Supply Risks Capture Market Attention
Potential uncertainties on the supply side are also driving up oil prices. Continued declines in U.S. crude inventories further reinforce market expectations of tight supply. Additionally, Russia's recent seaborne crude oil exports fell to their lowest level since August 2023, adding extra pressure on market supply. Meanwhile, analysts believe that Iran's oil supply could be affected by geopolitical risks during Trump's second term.
Mixed Market Sentiment
Despite the recent rise in oil prices, concerns about supply potentially exceeding demand continue to linger in the market. Standard Chartered has lowered its 2025 Brent crude price forecast by $5 to $87 per barrel and has reduced the first-quarter price forecast by $7 to $82 per barrel. Many investment banks remain cautious about the outlook for oil prices.
The Impact of Technical Levels on Oil Prices
Oil prices briefly fell by over 1% earlier this week after failing to break through key technical levels but later rebounded, indicating that the market is still searching for direction. Analysts believe that in the short term, the interplay of technical factors with supply and demand fundamentals will continue to dominate crude oil prices.
Looking ahead, continued cold weather and changes in the global supply chain may become major drivers of oil prices. The market will closely monitor the latest developments in crude oil inventories and geopolitics to determine price trends.
