- WTI US Oil prices recover following the release of much stronger-than-expected inventory data.
- Weekly figures show a steep drop in US Crude Oil stockpiles, signaling firmer demand.
- Developments around Venezuelan Oil exports and US macroeconomic data remain in focus.
West Texas Intermediate (WTI) US Oil trades around $56.70 on Thursday at the time of writing, up 0.90% on the day. WTI prices rebound, supported by the release of inventory data showing a sharp decline in US Crude Oil stockpiles.
According to weekly data published by the US Energy Information Administration (EIA), Crude Oil inventories fell by 3.831 million barrels in the week ended January 2. This drop is significantly larger than the previous week’s decline and stands in sharp contrast with market expectations, which had pointed to a build in stocks. A larger-than-expected drawdown in inventories is generally seen as a sign of stronger demand, providing immediate support to Oil prices.
However, the upside potential for WTI remains partly capped by geopolitical and policy developments. US President Donald Trump said that Venezuela would export around $2 billion worth of Oil to the United States (US). The US administration also indicated that it intends to retain long-term control over Venezuelan Oil sales and related revenues, with the stated goal of stabilizing the country’s economy and rebuilding its energy sector. These announcements fuel concerns about additional supply entering the North American market, which could limit further price gains.
Investors are also closely monitoring US macroeconomic indicators. The US employment report for December, due later on Friday, is a key event for markets. Job growth is expected to be moderate, alongside a slight decline in the unemployment rate. Any signs of a slowdown in the US labor market could weigh on the US Dollar (USD) and, through standard market dynamics, support dollar-denominated commodities such as Oil.
