Since the end of December, the price of oil has surged nearly $10 and traded above $82 on Tuesday evening, marking a new high since the summer. The main driver behind this increase is the declining American inventories, as noted by Bjarne Schieldrop, SEB’s chief commodity analyst, in an analysis.
The US crude oil inventories have been decreasing every week since mid-November, totaling 17.6 million barrels, and the country’s total commercial oil stocks have been steadily declining since the beginning of July last year. Schieldrop writes, “These declines explain the rising oil prices since the beginning of December.”
Additionally, new US sanctions against Russia have contributed to the price hike.
IEA released its monthly report on Wednesday, estimating that the global oil market had a deficit of about 400,000 barrels per day in H2-24. “If this is the case, the US accounts for almost all inventory reductions, as it dropped by about 300,000 barrels per day. It’s hard to believe,” writes the chief analyst.
IEA’s surplus for 2025 is also revised down by 200,000 barrels per day. “In reality, there is now only a surplus of 400,000 barrels per day. We believe this surplus estimate will further erode as demand will adjust even higher and supply will adjust even lower in the future,” Schieldrop argues.
“The rally has legs, but the technical picture is still in overbought territory, so there will be some pullbacks along the way up. Unless we get a rally all the way to $95 and then experience a technical pullback. The market still seems to have a bearish skepticism deeply rooted in its back after the decline in H2-24 and is partially unwilling to trade higher. But it’s the attitude and not the fundamentals.”
As the global oil market continues to fluctuate and respond to various economic and geopolitical factors, the future trajectory of oil prices remains uncertain. Stay tuned for further developments in this volatile market.