Oil prices rose on Wednesday trimming losses from the previous day, as the focus turned back to potential supply disruptions from sanctions on Russian tankers, though gains were capped as the market awaited more clarity on their impact.
Brent crude futures edged up 11 cents, or 0.1%, to $80.03 a barrel by 0515 GMT, after dropping 1.4% in the previous session. U.S. West Texas Intermediate crude climbed 23 cents, or 0.3%, to $77.73 a barrel after a 1.6% decline.
Prices slipped on Tuesday after the U.S. Energy Information Administration predicted oil would come under pressure over the next two years as supply would outpace demand.
“The dominant driver has been all about the Russian oil sanctions lately, compounded by a streak of stronger U.S. economic data,” said Yeap Jun Rong, market strategist at IG.
“The key question remains on how much Russian supply will be lost in the global market and whether alternative measures can offset the shortfall,” said Yeap, adding that in the near term oil may give up some of its sharp gains from the past week.
The market also found some support on Wednesday from a drop in crude stockpiles in the U.S., the world’s biggest oil consumer, reported by the American Petroleum Institute late on Tuesday.
“Oil prices are trading firmer in early morning trading in Asia today after API numbers showed that U.S. crude oil inventories fell more than expected over the last week,” said ING analysts.
The analysts added that while crude oil stocks in the country’s flagship storage hub Cushing, Oklahoma, increased by 600,000 barrels, inventories were still historically low. Cushing in the delivery location for WTI futures contracts.
The API reported U.S. crude oil stocks fell by 2.6 million barrels in the week ended Jan. 10, according to market sources citing the API figures. They added that gasoline inventories rose by 5.4 million barrels while distillate stocks climbed by 4.88 million barrels.
A Reuters poll showed analysts expected U.S. crude oil stockpiles fell by about 1 million barrels in the week to Jan. 10. Stockpile data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 10:30 a.m. EST (1530 GMT).
On Tuesday, the EIA trimmed its outlook for global demand in 2025 to 104.1 million barrels per day, while expecting supply of oil and liquid fuel to average 104.4 million bpd.
It predicted Brent prices would fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026, while WTI would average $70 in 2025 and fall to $62 next year.
(Reporting by Emily Chow and Jeslyn Lerh; Editing by Christian Schmollinger and Sonali Paul)