Despite the ongoing uncertainty in global markets, oil prices managed to settle higher yesterday, supported by the weaker USD. Even so, ICE Brent continues to trade below US$70/bbl and prices will likely remain sensitive to external developments. The oil market seems to be largely ignoring Ukraine agreeing to a US-brokered ceasefire. There is still uncertainty over where Russia stands on the proposed agreement.
Numbers overnight from the American Petroleum Institute (API) were fairly bearish. US crude oil inventories increased by 4.2m barrels over the last week, well above the roughly 2m barrel build the market expected. Draws in Cushing crude oil inventories and gasoline stocks offset some of the bearishness, falling 1.2m barrels and 4.6m barrels, respectively. Meanwhile, distillate stocks grew by 400k barrels.
U.S. Energy Information Administration’s (EIA) latest Short-Term Energy Outlook showed that surplus expectations for the market over 2025 and 2026 were reduced thanks to sanctions. The EIA now expects the global market to be in a 100k b/d surplus in 2025, compared to a previous forecast for a surplus of 500k b/d. In 2026, the EIA cut its surplus forecast from 1m b/d to 500k b/d. US crude oil production estimates were increased marginally for both 2025 and 2026, despite the more recent weakness seen in West Texas Intermediate (WTI) crude.
European natural gas prices rose yesterday with TTF Natural Gas Futures (TTF) settling almost 3.6% higher on the day. Colder weather is forecast in Northwest Europe over the coming days, which should support demand. In addition, increased attacks between Russia and Ukraine may provide further support to the market. The market is eagerly watching how ceasefire talks evolve. EU gas storage is a little under 36% full, down from 61% at the same stage last year and below the 5-year average of 47% full.
