Crude oil and gasoline prices dropped today, with crude reaching a 2-week low due to the US lifting sanctions on Venezuelan crude exports. However, prices rebounded slightly after EIA crude inventories fell more than expected and geopolitical tensions rose with the US seizing a Russian oil tanker.

Concerns about energy demand grew as Saudi Arabia cut the price of its Arab Light crude for February delivery. Morgan Stanley predicts a global oil market surplus will expand, leading to lower prices. Crude oil stored on tankers that were stationary for at least 7 days dropped by 3.4% to 119.35 million bbl.

China’s increased crude imports in December are good news for prices, as it rebuilds inventories. OPEC+ announced it would pause production increases in Q1 2026 to counter a global oil surplus. Ukrainian attacks on Russian refineries have impacted exports, while new US and EU sanctions on Russian oil companies have also curbed exports.

The IEA projected a record crude surplus of 3.815 million bpd in 2026, while OPEC revised its Q3 global oil market estimates to a surplus. US crude production is expected to rise to 13.59 million bpd. The weekly EIA inventory report showed mixed results, with gasoline and distillate stockpiles rising.

EIA reports showed US crude oil inventories below the 5-year average, while gasoline and distillate inventories varied. US crude oil production remained just below the record high. Baker Hughes reported an increase in active US oil rigs, recovering from a recent low.

Read more at Yahoo Finance: Crude Prices Tumble on Prospects that Venezuelan Crude Will Continue to Flow