DTN Oil Update

Maria Eugenia Garcia
DTN Energy Editor

HOUSTON (DTN) -- Oil futures prices edged lower at the start of the year on Friday, Jan. 2, amid expectations of a global supply glut.

Prices were under pressure as investors weighed ample inventories and increasing OPEC+'s production against ongoing geopolitical risk.

The International Energy Agency forecasted a record high glut in the crude oil market in 2026. Rapid supply growth from the Petroleum Exporting Countries (OPEC) and non-OPEC producers alike is expected produce at 2.4 million bpd, while global oil demand could rise by just 860,000 bpd, leading to a prognosticated oil overhang of 3.84 million bpd.

Traders continued to focus on the Ukraine-Russia peace talks, which were overshadowed by a renewed exchange of attacks between in recent days, as the conflict enters its fourth year. Tighter sanctions on Russian and Venezuelan oil trade are also in investor's radar, with ample supplies remaining stranded at sea, raising concerns about market dislocations.

However, a decline in U.S. crude inventories last week softened the drop in oil futures prices in the first trading session of the year.

On Wednesday, Dec. 31, the Energy Information Administration reported that commercial crude inventories dropped by 1.9 million bbl to 422.9 million bbl during the week ended Dec. 26. However, crude stocks were 7.3 million bbl higher than levels a year earlier.

Downstream, distillate fuel oil inventories rose by 5 million bbl to 123.7 million on the week profiled, while total motor gasoline stocks increased by 5.8 million bbl to 234.3 million in the same period.

The NYMEX WTI futures contract for February delivery fell by $0.61 to $56.81 bbl, and front-month ICE Brent futures contract price dropped by $0.61 as well to $60.24 bbl. February RBOB gasoline futures slid by $0.0215 to $1.6935 gallon, and the front-month ULSD contract decreased by $0.0118 to $2.1097 gallon.

In contrast, the U.S. Dollar Index rose by 0.123 points to 98.225 against a currency basket.