Oil Steady as U.S.-Iran Strike Risk Decreases

• Brent crude fell 3 cents to $63.73 per barrel while WTI rose 4 cents to $59.22, reversing from twelve-week highs reached earlier in the week
• U.S. inventory data showed larger-than-expected builds in crude and gasoline stocks, further pressuring prices alongside reduced geopolitical risk
• Shell released a bullish long-term outlook estimating primary energy demand could be 25% higher by 2050 compared to current levels

Summary

Market Movement:

Oil prices remained flat on Friday, January 16, with Brent crude down 3 cents (0.05%) to $63.73 per barrel and WTI up 4 cents (0.07%) to $59.22 per barrel as of 0223 GMT. Both benchmarks had reached multi-month (twelve-week) highs earlier in the week.

Key Drivers:

The primary catalyst for price stabilization was decreased U.S.-Iran military strike risk. President Trump indicated late Thursday that Iran's crackdown on protesters was acceptable, alleviating concerns about potential supply disruptions. This triggered a swift unwinding of the "Iran premium" that had driven recent price gains.

Supply Factors:

• U.S. Energy Information Administration reported crude and gasoline inventories rose more than analyst estimates, weighing on prices
• Venezuela reportedly resumed production cuts and exports, according to sources

Market Outlook:

• Shell released bullish long-term projections, estimating primary energy demand could be 25% higher by 2050 compared to current levels
• OPEC forecasts balanced oil supply-demand in 2026, with demand growth accelerating in 2027 at similar pace to current year

Analysis:

IG analyst Tony Sycamore noted the combination of reduced geopolitical tensions and substantial U.S. crude inventory builds prompted the premium reversal. The market is now consolidating after geopolitical fears subsided, with focus shifting to fundamental supply-demand dynamics and inventory levels.