By Giulia Petroni
Here is a look at what happened in oil markets in the week of Jan. 19-23 and what the focus will be in the days to come.
OVERVIEW: Oil prices are on track for weekly gains as traders closely watch developments in Iran and fear the impact of extreme cold weather on U.S. production. In afternoon European trading, Brent crude was near $66 a barrel, while West Texas Intermediate was above $60 a barrel.
MACRO: The latest PCE inflation data--the Fed's preferred inflation gauge--came in largely in line with forecasts in November, reinforcing expectations that the U.S. central bank will hold rates steady next week. A revised set of figures showed U.S. GDP grew at a 4.4% annualized rate between July and September, an acceleration from 3.8% in the three months prior.
Meanwhile, a weaker U.S. dollar had made commodities cheaper for holders of other currencies.
GEOPOLITICAL RISKS: President Trump said Thursday that the U.S. is watching Iran closely and has an "armada" heading toward the country, rekindling concerns of possible action against Tehran even though he said he hopes it won't be needed.
Fears of potential supply disruptions in the oil-rich region are keeping the geopolitical risk premium elevated, with traders saying the biggest concerns involve potential U.S. strikes against Iranian oil infrastructure or disruption to shipping through the Strait of Hormuz in retaliation.
Meanwhile, Trump said earlier this week that he would hold off from imposing tariffs on several European countries after reaching the framework of a deal on Greenland, a move that significantly reduces risks of trade frictions that would have likely weighed on global demand.
On the other hand, Ukrainian President Volodymyr Zelensky signaled signs of progress in talks to end the war in Ukraine as representatives from the U.S., Russia and Ukraine meet for trilateral talks in the United Arab Emirates. A cease-fire or peace deal would likely result in the removal of U.S. sanctions on Russia and end strikes against energy infrastructure, pressuring prices.
"Russian exports are holding up for now, but it is taking longer for this oil to find a buyer, so we are seeing a growing amount of Russian oil at sea," ING analysts said. "If this continues, it should eventually feed through to lower Russian oil production, tightening up the market."
SUPPLY AND DEMAND: Supply disruptions are driving crude higher, with oil production at Kazakhstan's largest oil field still halted as of Friday. At the same time, a cold blast sweeping through the U.S. is threatening oil production.
The overall fundamentals outlook, however, remains bearish due to growing oversupply. In its monthly oil report this week, the International Energy Agency raised its forecast for global oil-demand growth, citing an improved economic outlook and lower crude prices, but warned supply is still expected to outpace consumption.
The latest EIA data showed crude stocks rose by 3.6 million barrels last week, against expectations of a 500,000 barrel draw. Gasoline inventories were up by 6 million barrels in a 10th straight weekly build, and distillate stocks rose by 3.3 million barrels.
WHAT'S AHEAD: On the economic calendar, the Fed is scheduled to hold its first policy meeting of the year next week, announcing its decision on Wednesday. Traders don't expect any cuts to interest rates this month, but will pay close attention to Fed Chair Jerome Powell's speech for more cues on future moves. Investors will also pay attention to U.S. jobless claims data, trade deficit figure and PPI data.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
January 23, 2026 10:50 ET (15:50 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments