Alaska North Slope crude took a leap of $2.08 Jan. 15 to surpass $80 -- closing at $80.42 per barrel. West Texas Intermediate vaulted $2.54 to close at $80.04 and Brent leapt $2.11 to close at $82.03.
Crude was boosted by the U.S. Consumer Price Index report released Jan. 14 which showed that prices in December rose by just 0.4%.
The benign inflation data raised expectations of less aggressive interest rate management by the Federal Reserve, likely weakening the U.S. dollar and stoking demand for dollar-denominated crude oil by making it more affordable for foreign buyers.
Lower interest rates stimulate borrowing by consumers and business, and the ensuing activity creates a need for more energy and other commodities to support economic activity.
U.S. equity markets gained altitude as well, after the report broke.
U.S. commercial crude oil inventories for the week ending Jan. 10 saw a drawdown of 2.0 million barrels from the previous week to 412.7 million barrels -- 6% below the five-year average for the time of year, the U.S. Energy Information Administration said in its weekly petroleum data report Jan. 15.
Commercial crude supplies were expected to fall by 900,000 barrels on average, according to an analyst survey conducted by S&P Global Commodity Insights. Jan.10 marked the eighth consecutive weekly decline, sending commercial stockpiles to the lowest levels since April 2022.
Total motor gasoline inventories jumped by 5.9 million barrels for the period, to 243.6 million barrels, the EIA said. Distillate fuel inventories increased by 3.1 million barrels on the week to 132.0 million barrels.
Prices rose despite an announced ceasefire agreement in the Israeli/Hamas conflict.
The agreement, brokered by U.S., Egyptian and Qatari diplomats, outlines an Israeli military withdrawal from Gaza and a prisoner exchange.
Prices softened on Jan. 14, taking ANS lower by 73 cents to close at $78.34. WTI dropped $1.32 to close at $77.50, and Brent dropped $1.09 to close at $79.92.
Crude prices were hit by the EIA Short-Term Energy Outlook report released Jan. 14, which said that prices will be under pressure over the next two years as global production growth outpaces demand.
ANS jumped $1.34 Jan. 13 to close at $79.08, while WTI leapt $2.25 to close at $78.82 and Brent jumped $1.25 to close at $81.01.
On Jan 10, ANS leapt $2.34 to close at $77.44, WTI leapt $2.65 to close at $76.57 and Brent leapt $2.84 to close at $79.76.
Wider sanctions on Russian oil
The Jan. 10 and Jan. 13 uptrend was sparked by wider U.S. sanctions announced Jan. 10 on Russian oil, which were expected to send India and China in search of new sources.
The measures include restrictions on two major Russian producers -- Gazprom Neft and Surgutneftegaz -- as well as over 160 tankers carrying oil from Russia, Iran and Venezuela, the International Energy Agency said in its January Oil Market Report released Jan. 15. The sanctions complicate ship insurance arrangements, further disrupting logistics for the targeted oil.
"Benchmark crude oil prices rallied in early January as U.S. sanctions on Iran and Russia intensified and freezing temperatures swept across large parts of the Northern Hemisphere," the IEA said. "While it is too early to fully quantify the potential impact from these new measures, some operators have reportedly already started to pull back from Iranian and Russian oil."
Goldman Sachs commodity analyst Daav Struyven estimates that the vessels affected by the sanctions accounted for 1.7 million bpd of Russian crude and product exports in 2024 -- some 25% of the country's total export volumes, Benzinga reported Jan. 13.
"The U.S. administration highlighted three reasons for imposing these sanctions now: higher global spare capacity, forecasts of a 2025 oil surplus and currently lower prices," Struyven said in a note.
"We estimate that Brent rises to a peak of $90 per barrel in March in a combined scenario where both Russian and Iranian supplies are disrupted," Struyven said.
However, he added, "The long-term price impact of lower sanctioned supply is limited because we assume OPEC+ would stabilize the market by deploying its high spare capacity."
"There are genuine fears in the market about supply disruption; the worst-case scenario for Russian oil is looking like it could be the realistic scenario," PVM analyst Tamas Varga told Reuters. "But it's unclear what will happen when Donald Trump takes office next Monday."
ANS rose 77 cents Jan. 9 to close at $75.40, while WTI rose 60 cents to close at $73.92, and Brent rose 76 cents to close at $76.92.
Wednesday to Wednesday, ANS vaulted $5.79 from its Jan. 8 close to $80.42 on Jan. 15.
On Jan. 15, ANS traded at a 38-cent premium to WTI and at a $1.61 discount to Brent.
