Oil prices rose slightly in Asian trading on Friday but were on track to fall for a third straight week, hurt by U.S. President Donald Trump’s renewed trade war on China and threats to raise tariffs on other countries.
Brent crude futures were up 52 cents at $74.81 a barrel by 4:35 p.m. on Friday but are poised to fall 2.5 percent this week. U.S. West Texas Intermediate crude rose 44 cents to $71.05 a barrel, down about 2 percent on a weekly basis.
Yip John Runge, market strategist at IG, said: “Oil prices have seen some stability this morning after an overnight volatile session, as traders react to news of US sanctions on Iranian crude exports to China.”
The U.S. Treasury Department said on Thursday it had imposed new sanctions on a handful of individuals and tankers that help ship millions of barrels of Iranian crude oil annually to China, in a gradual move to increase pressure on Tehran.
Trump had announced a 10 percent tariff on Chinese imports as part of a wide-ranging plan to improve the U.S. trade balance, but suspended plans to impose hefty tariffs on Mexico and Canada.
“The negative pressure has arisen from the news flow about tariffs, with concerns about a potential trade war fueling fears of weakening oil demand,” BMI analysts said in a note on Friday.”
JPMorgan: Global oil demand rises in January
Analysts at JPMorgan said in a research note sent to Regson by JPMorgan’s commodity research team this week that global oil demand rose in January to 101.5 million barrels per day.
Analysts said in the note that this figure represented a “strong year-on-year increase of 1.5 million bpd” and confirmed that it exceeded their monthly forecast “by 200,000 bpd.”
“Early signs are promising, suggesting that this bullish momentum will last through February, supported by the cold winter in the U.S. and the busy travel landscape across Asia,” analysts said in the research note.
“Appetite for heating fuel is on the rise in the US, where the average demand for distillate for four weeks has reached levels not seen since March 2022,” they added.
“At the same time, Chinese New Year holiday travel volumes in Asia during the 17-day period starting Jan. 19 increased by eight percent compared to last year, exceeding official expectations of seven percent,” they said.
“In India, the enthusiasm of travel extends into February, driven by religious pilgrimages expected to attract 450 million worshippers between January and February, according to government estimates,” they continued.
JPMorgan analysts also noted in the note that observable global oil inventories saw an increase of seven million barrels in the last week of January.
“This net gain was primarily driven by a significant rise of 20 million barrels in global crude oil inventories, which was partially offset by a 13 million barrel decrease in petroleum product inventories,” they said.
“Regionally, despite a significant 19 million barrel drop in Chinese crude oil inventories, U.S. crude oil inventories have risen by nine million barrels, with the rest of the global increase in crude occurring outside the key regions we monitor,” they added.
Oil prices stop falling amid multiple pressures
The price of West Texas Intermediate (WTI) crude oil halted its four-day losing streak but remains on track for a third straight weekly decline, trading at around $70.80 a barrel during early European trading hours on Friday.
Crude oil prices faced pressure after U.S. President Donald Trump confirmed his plans to increase domestic oil production to push prices lower. His commitment came amid ongoing concerns about already high supply.
In addition, oil prices fell after a sharp rise in US crude and gasoline inventories, indicating weaker demand. U.S. crude inventories rose by 8.664 million barrels for the week ended Jan. 31, 2025 — the largest increase in nearly a year, far exceeding market expectations for an increase of 2.6 million barrels.
Trade tensions between the United States and China have also affected the market, with Beijing imposing tariffs on U.S. oil, liquefied natural gas and coal in response to Trump’s recent measures. However, the impact is expected to be limited by China’s relatively small imports of U.S. energy products. Despite this, hopes of easing trade tensions remain alive with President Trump and Chinese President Xi Jinping planning to discuss the possibility of eliminating tariffs.
Higher Saudi Aramco prices have supported growing demand from China and India, coupled with disruptions in Russian supplies resulting from U.S. sanctions, providing some price support. Other risks to supply remain as U.S. President Donald Trump’s renewed efforts to stamp out Iran’s oil exports are likely to remove up to 1.5 million barrels per day (bpd) from the market.
