IEA Oil Demand Forecast: The International Energy Agency slightly reduced its global oil-demand growth forecast for 2025 to 1.05 million b/d, with growth being driven by lower prices and a better economic outlook in developed countries. It expects Chinese oil demand to grow by 220,000 b/d this year, with a rebound in gasoil consumption linked to improving sentiment around China's property market. Oil demand growth in 2024 was revised up to 940,000 b/d, boosted by lower fuel prices, colder weather, and increased U.S. petrochemical activity. The IEA projects global oil supply to rise by 1.8 million b/d in 2025, with non-OPEC+ countries contributing the bulk of the increase, while OPEC+ members may also adjust their production cuts to meet demand.

Ceasefire Deal: Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners, an official briefed on the deal told Reuters on Wednesday, opening the way to a possible end to a 15-month war that has upended the Middle East. The agreement follows months of on-off negotiations brokered by Egyptian and Qatari mediators, with the backing of the United States, and came just ahead of the Jan. 20 inauguration of U.S. President-elect Donald Trump.

U.S. Inventories: The EIA on Wednesday reported U.S. crude oil stocks, excluding the SPR, fell to their lowest levels since April 2022 while refined product inventories rose. The agency said commercial crude stocks fell last week by 2 million bbl as exports increased and imports decreased, while gasoline holdings rose by about 5.9 million bbl, marking a third straight week of 5-million-bbl builds for gasoline. Distillate inventories rose by 3.1 million bbl surpassing expectations. EIA reported gasoline demand fell last week, but remained comfortably above 8 million b/d at 8.325 million b/d. Distillate demand climbed more than 20% week over week by nearly 700,000 b/d to 3.839 million b/d with cold weather likely behind some of the gain.

Market Overview: Oil prices eased slightly after reaching multi-month highs, driven by U.S. sanctions on Russia and a larger-than-expected drop in U.S. crude stocks. U.S. crude oil inventories fell to their lowest since April 2022, partly due to rising exports and falling imports. The tightening global supply outlook is exacerbated by sanctions on Russian oil producers, which have prompted buyers to seek alternative sources. Meanwhile, global oil demand growth has been slightly below expectations, though factors like increased travel in India and China could boost consumption in the coming weeks

In the January Short Term Energy Outlook published by the EIA, global liquid fuel production growth increases in 2025 and 2026 due to a combination of the relaxation of OPEC+ production cuts and further growth from countries outside of OPEC+. Global liquid fuel production increases by 1.8 million b/d in 2025, up from growth of 0.5 million b/d in 2024. The EIA expects growth of 0.2 million b/d in 2025 from OPEC+ producers, before production grows by 0.6 million b/d in 2026 as voluntary production cuts unwind but output remains below the group’s current targets in an effort to avoid significant inventory increases. They still expect growth in oil production during 2025 to be led by countries outside of OPEC+, increasing by 1.6 million b/d before slowing to growth of less than 0.9 million b/d in 2026. Production growth outside of OPEC+ is expected to be driven by the United States, Canada, Brazil, and Guyana in 2025. Except for Brazil, growth slows for all those countries in 2026.

Oil prices settled lower on Thursday, driven by expectations that Yemen's Houthi militia would cease its attacks on ships in the Red Sea, which had previously disrupted global shipping. U.S. retail sales data showed strong demand, but investors interpreted this as a sign the Federal Reserve might hold off on cutting interest rates soon. This caused some initial losses in oil prices, although comments from Fed Governor Christopher Waller about potential rate cuts helped prices regain ground. Meanwhile, U.S. sanctions on Russia continued to weigh on the market, particularly as Russia's oil customers sought alternatives. Lastly ,investors were cautious ahead of the new U.S. administration's approach to these sanctions and its potential impact on oil prices.