Oil prices witnessed a notable uptick on Thursday, January 25, propelled by a more significant-than-expected 9.2 million barrel reduction in US crude stockpiles, as reported by the Energy Information Administration (EIA). Brent crude futures climbed 1.2% to $81.02 a barrel, while US West Texas Intermediate crude rose 1.3% to $76.09 a barrel.
The drop in stockpiles resulted from a sharp decline in US crude imports due to winter weather, impacting refinery operations and reducing road traffic. Concurrently, adverse weather conditions in North Dakota led to a decline in US oil output from a record 13.3 million barrels per day to a five-month low of 12.3 million barrels per day.
Geopolitical tensions heightened with a fresh attack by Houthi forces on ships off Yemen’s coast, emphasizing the vulnerability of global transit routes. Maersk reported explosions near Yemen forced two US military supply-carrying ships to turn around in the Bab al-Mandab Strait.
China’s central bank’s announcement of a substantial cut in bank reserves injected $140 billion into the banking system, signaling support for its fragile economy and declining stock markets. This move further contributed to the surge in oil prices.
Despite these positive factors, concerns lingered about sustained high-interest rates. The US economy’s faster-than-expected growth in the fourth quarter hinted that the Federal Reserve might not rush to cut interest rates.
Analysts anticipate ongoing volatility in crude oil prices, projecting support at $74.50–73.90 and resistance at $75.85-76.40. In INR, crude oil is expected to find support in the range of ₹6,185-6,100, with resistance at ₹6,300-6,410. As geopolitical uncertainties persist and global economic conditions remain delicate, the dynamic nature of crude oil prices is likely to continue.