Crude Oil Plummets As Russia-Ukraine Peace Plan Speeds Up
WTI Crude Oil for March delivery was last seen trading down by $1.29 (or 2.13%) at $59.33 per barrel.
Ukraine’s President Volodymyr Zelenskyy met with U.S. President Donald Trump on the sidelines of the World Economic Forum at Davos, Switzerland.
After the hour-long talk, Zelensky stated that they had “very good talks, while Trump confirmed that “the meeting was good.”
Trump’s envoy Steve Witkoff is heading to Russia with Trump’s son-in-law to negotiate with Russian counterparts to wrap up the U.S-proposed Russia-Ukraine peace deal as quickly as possible.
Before starting, Witkoff stated that the peace deal is now “down to one issue” without revealing further details on what it is.
Meanwhile, the Energy Information Administration said crude oil inventories shot up by 3.6 million barrels last week after jumping by 3.4 million barrels in the previous week. Economists had expected crude oil inventories to rise by 1.1 million barrels. Crude inventories at the Cushing, Oklahoma delivery hub rose by 1.478 million barrels in the week.
At 426.0 million barrels, U.S. crude oil inventories remain about 2% below the five-year average for this time of year, the EIA said.
The report said gasoline inventories also surged by 6.0 million barrels last week and are about 5% above the five-year average for this time of year.
Distillate fuel inventories, which include heating oil and diesel, also jumped by 3.3 million barrels last week but remain about 1% below the five-year average for this time of year, the EIA said.
Yesterday, American Petroleum Institute data on crude oil inventories revealed an increase by 3.04 million barrels for the week ending January 16, building on a 5.3 million-barrel increase in the prior week.
Days before, Trump threatened eight EU nations that they have to face a new 10% tariff from February 1 if they do not support him on Greenland with the likelihood of increasing the levies to 25% by June 1 if the stalemate goes on.
The tariff threat increased concerns of global trade uncertainty and weakened demand for oil and energy.
However, yesterday at the World Economic Forum in Davos, Switzerland, while delivering his keynote address, Trump urged NATO nations to commence negotiations on Greenland soon though he assured that he would not use force in driving his pursuit.
Hours later, Trump posted on Truth Social that the leader of NATO Secretary General Mark Rutte agreed to a framework for a future deal on Arctic security and thereby eliminating the need to impose his planned tariffs on EU nations.
Yesterday, pointing to “bloated balances” as the reason for the drop in prices, the International Energy Agency stated that the global oil market will be faced with a strong surplus in the first quarter of 2026.
The agency raised the demand growth forecast to 930,000 barrels per day and added that oil supply would override demand by 4.25 million bpd (or approximately 4% of global demand) through the first quarter 2026.
In Kazakhstan, the Tengiz and its adjacent Korolev oilfields were compelled to shut down after fires disrupted Tengiz power systems. Prior to the shutdown, Tengize produced approximately 360,000 barrels per day of crude oil.
Tensions between the U.S. and Iran have flared up once again. The Commander of Iran’s Revolutionary Guards warned the U.S. and Israel that their forces had their “finger on the trigger.”
Iran’s state-run television carried imagery appearing to target Trump directly. Trump retaliated, stating that if Iran attempts it, the U.S. would wipe them from the earth.
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