Oil rises after paring losses from the previous day

Oil prices rose on Wednesday, paring losses from the previous day. The focus now turns to potential supply disruptions from sanctions on Russian tankers. But gains are capped as the market awaits more clarity on the impact of sanctions.

Brent crude futures rose 11 cents, or 0.1%, to $80.03 a barrel by 0515 GMT after falling 1.4% in the previous session. WTI Crude rose 23 cents, or 0.3%, to $77.73 a barrel after falling 1.6%.

Prices fell on Tuesday after the U.S. Energy Information Administration (EIA) forecast that oil prices will come under pressure over the next two years as supply outstrips demand. The EIA lowered its global demand outlook to 104.1 million barrels per day in 2025 and expects oil and liquid fuel supplies to average 104.4 million barrels per day.

The EIA forecasts Brent prices to fall 8% in 2025 to an average of $74 per barrel, then fall to $66 per barrel in 2026, while WTI will fall to an average of $70 in 2025 and $62 next year.

The dominant driver of recent growth has been sanctions on Russian oil combined with strong U.S. economic data. The key questions on the global market remain how much Russian supply will shrink and whether alternative measures can offset the shortfall.

The market also received some support on Wednesday from falling crude inventories in the U.S., the world’s largest oil consumer, as reported by the American Petroleum Institute (API) late Tuesday.

Oil prices traded stronger in Asia early today after API figures showed U.S. crude inventories fell more than expected last week.

Crude inventories at Cushing, Oklahoma, the country’s largest storage hub, rose by 600,000 barrels, but inventories are still historically low.

U.S. crude inventories fell by 2.6 million barrels in the week ending Jan. 10, according to API figures. Gasoline inventories rose by 5.4 million barrels and distillate inventories rose by 4.88 million barrels.

Analysts had expected U.S. crude inventories to fall by about 1 million barrels in the week to Jan. 10. Inventory data from the Energy Information Administration (EIA) is due at 1530 GMT.

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