Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone
January 24, 2025 –
“The crude oil market is navigating turbulent waters, marked by a complex interplay of geopolitical factors and supply and demand dynamics. The recent fluctuations in oil prices, with a downward trend, reflect growing concerns over the global economic impact of proposed tariff policies. If implemented, these measures could lead to a slowdown in global economic growth, which in turn would negatively impact energy demand.
The shadow of tariffs looms over the energy market, introducing an uncertainty factor that could amplify volatility and additionally strengthen the US dollar. A stronger dollar could place additional pressure on crude prices, which are traditionally quoted in this currency.
The mixed data provided by the Energy Information Administration (EIA) adds complexity to the outlook. While the decline in US commercial crude inventories by 1 million barrels, placing them 6% below the five-year seasonal average, suggests a positive trend for prices, the increase in gasoline inventories by 2.3 million barrels, although still 1% below the five-year average, indicates a potential sign of weaker domestic demand.
This contrast highlights the delicate balance between supply and demand in the market. The consecutive reduction in US crude inventories, now totaling nine weeks, is another factor to consider.
A notable aspect is the increase in US crude imports to 6.7 million barrels per day. This growth reflects a greater reliance on external sources, creating opportunities for exporting countries such as Mexico and Colombia. For these economies, a rise in oil revenues could strengthen public finances, stabilize their currencies, and potentially boost economic growth.
The rise in US imports represents an opportunity for Latin American exporting countries. However, it is crucial to monitor global market developments and the implementation of policies that may affect demand.
In conclusion, the outlook for crude oil prices remains uncertain. The interaction between tariff policies, supply and demand dynamics, and geopolitical factors will continue to influence market volatility.”
Analysis by Quasar Elizundia, Expert Research Strategist – Pepperstone