Crude oil prices rebounded modestly after closing at 58.03 yesterday, December 30. At the time of writing the article, the Crude Oil Feb 26 (CL=F) is trading slightly higher at $58.02, up 0.12%, as of 11:10 PM EST, despite broader pressure from a stronger U.S. dollar. RBOB Gasoline Feb 26 (RB=F) was trading lower at $1.73 per gallon, down 0.25%, as of 12:53 a.m. EST. The U.S. Dollar Index edged 0.09% higher to 98.33 at press time. The strengthening U.S. dollar is putting limited downward pressure on oil prices.
A Weekly Update From EIA Indicates Near-Term Bearish Trend
According to the EIA weekly inventory report, U.S. crude stock levels rose more than expected. U.S. crude oil increased by 0.4 million barrels in the week ending December 19, according to the EIA weekly update report. The modest increase is likely to create near-term supply concerns. Yet, refinery runs eased slightly, but utilization stayed high at 94.6%. The gasoline and distillate production increased.
Crude imports declined sharply week over week and were 4.6% lower year over year on a four-week average. Gasoline inventories jumped 2.9 million barrels to above seasonal norms, while distillate stocks remained below average.
Even though overall petroleum inventories edged higher modestly, the total products supplied down 0.8% year over year by declines in gasoline, distillate, and jet fuel consumption.
The mild rebound in the oil price indicates that rising geopolitical tensions in Nigeria, Venezuela, and Russia overshadow a bearish EIA report. Moreover, OPEC (Organization of the Petroleum Exporting Countries) decided at its November 30 meeting to keep oil output unchanged through the first quarter of 2026, sticking to its plan to pause further production increases.
Geopolitical Tensions Temper Downside Risks for Crude
The U.S. continues to ramp up pressure on Venezuela by seizing oil tankers suspected of violating U.S. sanctions, including one carrying nearly 1.8 million barrels. The Trump administration has announced a blockade for the entry and exit of sanctioned tankers entering and leaving Venezuelan ports. The move is aimed at cutting off Venezuela’s revenue from oil exports. The Latin American country holds the world’s largest proven oil reserves. The U.S. also reportedly carried out a drone attack targeting a “port facility” allegedly linked to a street gang.
The Middle East is also embroiled in geopolitical tensions linked to differing Yemen strategies between the UAE and Saudi Arabia. Along with escalating geopolitical tensions between the U.S. and Venezuela, the geopolitical uncertainties continue to rise from Russia as well. Furthermore, U.S. airstrikes targeting militants in Nigeria added to broader geopolitical risk sentiment. Yet, any further geopolitical escalations in oil-producing countries often have pronounced implications for oil price trajectories.
Trading Group Warns of Price Divergence
The divergence between falling gasoline prices and firmer crude has raised concerns about demand, with the WTI trading group warning on X that a prolonged gap could pressure oil prices in the weeks ahead.
“If the divergence persisted, it could adversely impact #Oil prices in the coming days, if not weeks,” a WTI-focused trading group wrote on X. Weak gasoline demand is reinforcing concerns about end-user consumption.
