Crude Oil Soars As U.S. Data Indicates Stronger Demand

(RTTNews) - Snapping two days of decline, crude oil skyrocketed on Thursday as data showing a decline in the U.S. crude inventories allayed global oversupply concerns and supported prices.

WTI Crude Oil for February delivery was last seen trading up by $1.70 (or 3.04%) at $57.69 per barrel.

According to the U.S. Energy Information Administration, for the week ending January 2, crude oil inventories in the U.S. fell by 3.831 million barrels, the largest draw since late October. Economists had anticipated crude oil inventories to rise by 1.1 million barrels.

For the same period, gasoline inventories jumped by 7,702,000 barrels, distillate inventories increased to 5,594,000 barrels, and heating oil inventories climbed by 672,000 barrels.

A day before, the data from American Petroleum Institute also revealed that U.S. crude oil inventories fell by 2.8 million barrels for the week ending January 2, reversing the 1.7-million-barrel build from the week before.

Since a larger-than-expected draw in inventories is viewed as an indication of stronger demand, this lent strength to oil prices.

However, the upward momentum was blocked due to geopolitical escalations.

Last Saturday, U.S. forces captured and flew Venezuelan President Nicolas Maduro and his wife to the U.S., where they are facing several criminal charges.

Following Maduro's ouster, U.S. President Donald Trump announced that the U.S. would be "running" Venezuela with unhindered access to the nation's rich oil wealth and called on the U.S. oil majors to rebuild Venezuela's energy sector.

Yesterday, Trump indicated his intention to retain long-term control.

On Wednesday, the U.S. military seized two "sanctioned oil tankers."

Among the two, the Marinera (previously known as Bella 1) had been evading U.S. forces for weeks, while M Sophia carried up to two million barrels of Venezuelan crude oil. Both are reportedly a part of the so-called "ghost fleet" vessels.

The U.S. non-farm payroll data is slated to be released on Friday and will shed light on the strength of the U.S. labor market.

With the U.S. Federal Reserve's next FOMC meeting slated for later this month, Friday's data is significant to forecast the Fed's decision.

The U.A.E., Iraq, Kazakhstan, and Oman have committed to intensify their compensation cuts to a total of 829,000 barrels per day until June, during the earlier part of 2026. These new pledges by the quartet follows an earlier decision by the OPEC+ alliance this month to pause the unwinding of its voluntary cuts in early 2026.

Various agencies have forecast that 2026 would be a year of oversupply for crude oil due to excess production from non-OPEC nations. The U.S., Brazil, Canada, Guyana, and Argentina are accelerating their output. However, subdued demand growth is estimated amid a weakening global economic landscape.

The U.S.-proposed peace plan to end the Russia-Ukraine war is being studied by Ukraine and its European allies.

Meanwhile, the Trump administration has back a new bill, (the Graham-Blumenthal Sanctions Bill) to authorize the president to impose up to 500% tariffs on countries that purchase oil or uranium from Russia.

Trump intends to block Russia from receiving billions of petrodollars, which the U.S. claims Russia uses for its war against Ukraine.

In Iran, the anti-regime protests that began in December 2025 are expanding day by day, resulting in clashes between the security forces and protesters.

Trump had already warned the Iranian government that the U.S. would intervene if violence were unleashed against protesters.

In the U.S., despite contrasting views from various U.S. Federal Reserve officials, investors are not anticipating a rate cut at the Fed's upcoming meeting.

The announcement following the meeting could impact the U.S. dollar, and consequently, oil prices.