On January 8th, the global oil prices experienced a day of significant turmoil, with market sentiments fluctuating due to multiple intertwined factors. During the early trading session, oil prices surged significantly driven by several favorable news. However, an evening report concerning Trump's tariff plan threw the market into a major upheaval, causing the dollar to plummet and the energy market to experience intense volatility. Eventually, oil prices fell back after reaching highs, closing down and ending the strong performance of five consecutive days of gains.
Trump Tariff Rumors Cause Market Turbulence
In the evening, media reports emerged that Trump's aides were exploring the possibility of imposing tariffs on "all countries," but only on key imported goods. This news quickly triggered market panic, leading to a sharp decline in the dollar, which sparked a broad rebound in financial markets, with oil prices recovering swiftly from lows and setting a new high for the current rebound. However, shortly after, Trump denied the related reports through social media, causing oil prices to quickly give back the day's gains after sustained rises, eventually closing lower.
Cold Wave Intensifies Energy Price Fluctuations
Meanwhile, the severe cold weather in Europe and the United States had a significant impact on the energy market. On Monday, US natural gas prices soared over 10%, with market expectations predicting the cold wave to persist throughout January and gradually ease in February. The latest forecasts indicated that the cold wave would peak around January 8th, with extreme weather potentially accelerating energy demand and further driving up energy prices.
In Europe, the cold weather has also put pressure on energy supply. Currently, European natural gas storage levels are only slightly above 70%, far below last year's 85% and the five-year average of 76%. The expected faster depletion of inventory will likely support the natural gas market and indirectly impact crude oil prices.
Middle East Supply Tensions Drive Up Oil Prices
On the supply side, new information emerged that Saudi Arabia would raise the official selling price for Arab Light crude oil to Asian buyers in February to a premium of 1.5 USD per barrel over the Oman/Dubai benchmarks, up 60 cents from January prices, exceeding market expectations. This adjustment is attributed to the escalation of Western sanctions on Iran and Russia, leading to increased demand for Middle Eastern oil. Market analysis suggests that prices for some Middle Eastern crude have soared to the rare level of trading at a premium over Brent crude, reflecting heightened market concerns over supply shortages.
Market's Short-Term Adjustments May Fluctuate
Although multiple factors support strong oil price performance, with the accumulated overbought pressure following continuous rises, some funds opted to close positions. Monday's pullback ended the streak of five consecutive days of gains, putting the market into a short-term adjustment phase. Analysts anticipate that oil prices may continue to oscillate at high levels in the near term, with investors needing to closely monitor market rhythms and seize opportunities amid fluctuations.
The global financial markets began with turbulence under the influence of various variables, and the energy market is likely to remain a focal point in the upcoming period.
