International oil prices' current rebound is the result of a combination of "extreme weather triggers" and "exposure of supply vulnerabilities." The market trend driven by the resonance of cold snaps and geopolitical tensions frequently appears every winter. When coupled with draws in commercial crude inventories, the magnitude of the rebound tends to be even greater.
The cold snap season in Europe and the US is typically concentrated between December and February each year. Before the actual arrival of severe cold, refineries usually stock up in advance to meet rising heating demand. Concurrently, as the consumption of refined products increases, US crude oil and total petroleum inventories (excluding strategic reserves) may seasonally decline. Meanwhile, extremely cold weather can also directly impact crude oil supply. For instance, past events have seen frozen field equipment, production halts, or power failures due to severe cold, leading to a drop in crude output. This year, the same script is being replayed. Following a cold snap in Europe in mid-January, a US cold snap arrived as expected in the most recent week. However, the impact logic of these cold snaps on oil prices differs between the two regions. Europe is not a crude oil producer or exporter but a major consumer; therefore, the cold snap primarily boosts oil and gas prices from a demand surge. In contrast, the US cold snap has affected the operation of energy infrastructure and strained the power grid. According to analyst and trader estimates, US oil producers lost up to 2 million barrels per day in output over the past weekend, accounting for approximately 15% of national production.
Reviewing the cold snap season trends during the recent years of this crude oil bear market cycle reveals that international oil prices have almost consistently followed a pattern of ceasing their decline and beginning to rebound from mid-December over the past three years. The underlying drivers include crude inventory draws, cold snaps boosting heating demand, and geopolitical tensions. These factors often converge to create a resonant market trend between December and February each year.
In 2024, oil prices bottomed out in mid-December, driven by escalating tensions in Syria. This was followed by an EIA inventory report showing a larger-than-expected draw, keeping the momentum. The arrival of a US cold snap then intensified near-term supply tightness, and finally, US sanctions on Russia provided an additional boost, leading to a significant price surge where WTI rebounded by approximately 14%. In 2023, an early EIA inventory draw coincided with improving macroeconomic sentiment, prompting oil prices to stop falling and begin rebounding as early as the beginning of December. Subsequently, a rebound driven by the convergence of a cold snap and geopolitical tensions also occurred at the end of January, with a magnitude of about 11%. The WTI rebound in 2022 was only 7%, primarily because US commercial crude inventories did not experience a significant draw. Although heating demand still provided some price support, the lack of further geopolitical stimulus resulted in a market characterized by wide-ranging fluctuations.
This year, oil prices similarly hit a bottom on December 16, 2025. As of January 28, 2026, the front-month WTI contract had rebounded by approximately 14.6%, exceeding the gains of the past three years. The primary reasons are that oil prices had reached a relatively low range, making them more sensitive to bullish factors, and this year's geopolitical situation is more complex, potentially involving actual military conflict.
Looking ahead, the impact of the cold snap on oil prices is more short-term, while geopolitical tensions are expected to provide medium-term support for the price floor. The impact of the cold snap on natural gas and fuel oil prices is more pronounced than on crude. On January 28, international natural gas futures ended their multi-day rally and began to show marginal declines. Currently, the extent of the US cold snap has also receded from nationwide to more localized areas. As weather conditions improve, the price-supporting effect of the cold snap on oil is expected to gradually diminish. In contrast, geopolitical tensions are protracted, injecting medium to long-term uncertainty into oil prices. On January 27, sources indicated that the US recently briefed Israel on its preparations for potential military action against Iran. The US side stated that relevant preparations are expected to be completed within two weeks, and a "window of opportunity" for action might emerge within the coming months. The US side also emphasized that this does not mean action would only be taken after all preparations are complete. If US President Trump issues an order, US action could be initiated earlier, although this option is not currently considered imminent.
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