Crude oil futures traded higher on Wednesday morning after a weekly report by the industry body American Petroleum Institute (API) indicated a decline in inventories in the US for the week ending January 10.

At 9.58 am on Wednesday, March Brent oil futures were at $80.14, up by 0.28 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $76.66, up by 0.38 per cent.

January crude oil futures were trading at ₹6729 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6736, down by 0.10 per cent, and February futures were trading at ₹6653 against the previous close of ₹6657, down by 0.06 per cent.

According to API, crude oil inventories declined by 2.6 million barrels for the week ending January 10.

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In their Commodities Feed for Friday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices are trading firmer in early morning trading in Asia on Wednesday after API numbers showed that US crude oil inventories fell more than expected over the last week. Cushing crude oil stocks increased by 600,000 barrels, although inventories are still historically low. Meanwhile, for products, gasoline and distillate stocks increased by 5.4 million barrels and 4.9 million barrels, respectively, they said.

On the decline in oil prices in Tuesday’s session, ING Think’s Commodities Feed said oil prices fell on Tuesday with ICE Brent down 1.35 per cent to settle below $80 a barrel. Reports of a potential ceasefire between Israel and Hamas would have supported this move. This is the first daily decline since the US announced stricter sanctions against the Russian energy sector, they said.

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It is still unclear what the impact of these sanctions will be on oil flows. However, buyers of Russian oil have been looking at alternatives, in case these sanctions turn out to be disruptive. Any significant impact, however, is likely to be short-lived with Russia eventually finding ways to circumvent these latest sanctions. The uncertainty over the impact means that oil prices will likely be better supported than initially expected through the first quarter of the year, Commodities Feed said.

Meanwhile, US EIA’s (Energy Information Administration) January short-term energy outlook expected a downward oil price pressures over much of the next two years, as it expected global oil production to grow more than global oil demand. “We forecast that the Brent crude oil price will average $74 a barrel in 2025, 8 per cent less than in 2024, and then continue fall another 11 per cent to $66 a barrel in 2026,” it said.

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EIA’s forecast said the unwinding of OPEC+ production cuts and strong growth in oil production outside of OPEC+ would result in the growth of global oil production. It said global oil consumption growth would continue to be less than the pre-pandemic trend.

January natural gas futures were trading at ₹337.60 on MCX during the initial hour of trading on Wednesday against the previous close of ₹348.30; down by 3.07 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), January dhaniya contracts were trading at ₹7,526 in the initial hour of trading on Wednesday against the previous close of ₹7,580; down by 0.71 per cent.

January jeera futures were trading at ₹22,900 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹23,055; down by 0.67 per cent.