Crude Oil Edges Lower Amid Profit-Taking, Strengthening USD

(RTTNews) - After three days of sharp gains, crude oil slid on Friday as traders opted for profit-taking. In addition, the U.S. dollar index moving higher and the possibility of diplomatic intervention in the U.S.-Iran conflict weighed on prices.

WTI Crude Oil for March delivery was last seen trading down by $0.22 (or 0.34%) at $65.20 per barrel.

The U.S. government faces a partial shutdown threat, with the deadline for financing the government ending at midnight tonight.

A deal struck between the Democrats and the Republicans and the White House to pass bills (which now strips funding the Department of Homeland Security) is struck midway after a planned Senate vote on the deal stalled.

Even if it is approved int the Senate, the plan needs to return to the House of Representatives, which is in recess through the weekend.

Meanwhile, Trump announced former U.S. Federal Reserve Governor Kevin Warsh as his nominee to succeed current Chair Jerome Powell, whose tenure ends in a few months.

As Warsh is known as a supporter of higher interest rates, the choice has surprised analysts, as Trump has been advocating for lower rates.

The U.S. Dollar Index was last seen trading at 96.75, up by 0.47 (+0.49%).

Yesterday, the Trump administration lifted some sanctions on Venezuela's oil industry to facilitate U.S. companies selling its crude oil and announced more easing would be made in the coming days.

Earlier this month, U.S. forces stormed the fortress of Venezuelan President Nicolas Maduro, captured and flew him to the U.S., where he is currently facing criminal investigation.

The new leadership in Venezuela amended its hydrocarbon policy to offer private companies more control over production and sales of its rich oil reserves, which largely benefits the U.S.

In the Middle East, despite Trump ramping up his warning to Iran of severe attacks if it refuses to negotiate over its nuclear programs, Iran has stood its ground, refusing to budge under U.S. pressure.

Iran's plans to conduct "live-fire drills" in and around the Strait of Hormuz, a critical chokepoint for oil transit has alarmed commercial vessels as well as traders about supply disruption.

An armada of U.S. naval fleet is near Iran.

Turkey has offered to mediate between the U.S. and Iran.

On Wednesday, the U.S. Energy Information Administration highlighted that the U.S. commercial crude oil inventories decreased by 2.3 million barrels for the week ending January 23. This does not include the piles in the Strategic Petroleum Reserve.

Last year, China accelerated its crude oil imports to an annual all-time high, nearing 11.55 million barrels per day.

Though China does not report its inventory data, for December 2025, China's numbers were reported at 2.67 million barrels per day, compared to 1.88 million bpd in November.

At Trump's request, Russia agreed to "pause" strikes on Ukraine until February 1. Despite the U.S. urging Russia and Ukraine to settle on the Trump-proposed peace plan, "territorial concessions" remain a sticking point with both nations rigid on their demands.