Oil prices edged lower on Thursday, snapping a two-session rally as a surprise buildup in U.S. crude and gasoline stockpiles reminded traders that fundamental supply pressures continue to weigh on markets despite recent geopolitical volatility.
Brent crude, the international benchmark, fell 28 cents to $64.96 per barrel by mid-morning European trading, down 0.43%. U.S. West Texas Intermediate for March delivery declined 19 cents, or 0.31%, to $60.43 a barrel.
The retreat came after both contracts posted gains exceeding 0.4% Wednesday, building on Tuesday’s stronger 1.5% rally triggered by unexpected supply disruptions in Kazakhstan, where OPEC+ producers Tengiz and Korolev oilfields were forced offline due to power distribution problems.
Market sources citing American Petroleum Institute data reported Wednesday evening that U.S. crude inventories swelled by 3.04 million barrels during the week ending January 16—nearly triple the 1.1 million barrel increase forecast by Reuters-polled analysts. Gasoline stocks surged even more dramatically, climbing 6.21 million barrels, while distillate inventories posted a marginal 33,000-barrel decline.
“High crude inventories are limiting further gains in oil prices in an oversupplied market,” said Yang An, an analyst at Haitong Futures, summarizing the prevailing bearish undertone that has kept prices range-bound in recent weeks.
The inventory figures underscore persistent concerns about oversupply that have dogged oil markets through the opening weeks of 2026, even as geopolitical developments have periodically provided short-lived support.
Adding complexity to the market’s direction, U.S. President Donald Trump appeared to walk back aggressive posturing on multiple fronts Wednesday, injecting cautious optimism about global economic stability—a key driver of oil demand.
Trump ruled out military force regarding Greenland and backed away from tariff threats targeting Europe, moves that analysts said could ease transatlantic trade tensions that have threatened economic growth.
“The cooling of the rhetoric surrounding Greenland would reduce trade tensions between the U.S. and Europe and is supportive of the global economy and oil demand,” noted Mingyu Gao, chief researcher for energy and chemicals at China Futures.
However, Trump simultaneously maintained a harder line on Iran, stating he hoped to avoid further military action but warning Washington would respond if Tehran resumed its nuclear program. That ambiguity has kept a geopolitical risk premium embedded in prices, Gao added.
Perhaps most significantly for oil markets, Trump indicated Wednesday that negotiators were “reasonably close” to brokering a deal to end the Russia-Ukraine war, with a meeting scheduled later that day with Ukrainian President Volodymyr Zelenskiy.
Should a peace agreement materialize, analysts expect it would likely lead to the lifting of U.S. sanctions on Russian oil exports—potentially flooding markets with additional barrels and exerting further downward pressure on prices.
“Against the backdrop of Greenland and the receding prospect of action in Iran, oil prices should hold at around $60 a barrel,” said Tony Sycamore, an analyst with online broker IG, though he acknowledged that a Ukraine peace deal could push prices below that threshold.
Offering a counterbalance to bearish supply indicators, the International Energy Agency on Wednesday revised its 2026 global oil demand growth forecasts upward in its latest monthly report. The adjustment suggests a “slightly narrower surplus” for markets this year, though the agency continues to project oversupply conditions will persist.
For now, traders appear to be settling into a wait-and-see posture, with crude prices hovering near the psychologically important $60 mark for WTI—a level that has become a focal point for both bulls and bears as they assess whether geopolitical uncertainties or fundamental oversupply will ultimately drive market direction in the months ahead.
Official U.S. government inventory data from the Energy Information Administration, due for release later Thursday, will provide further clarity on the supply picture and could determine whether the current downdraft extends or whether bargain hunters step in to defend recent support levels.
WHAT YOU SHOULD KNOW
Oil prices are retreating despite geopolitical tensions because the fundamental reality is clear: there’s simply too much oil in the market.
U.S. crude inventories jumped by 3 million barrels last week—nearly triple expectations—while gasoline stocks surged by over 6 million barrels. This supply glut is overwhelming any support from Kazakhstan’s production outages or Middle East uncertainties.
Even as President Trump’s softer tone on trade tensions and potential Ukraine peace talks adds complexity to the outlook, prices are gravitating toward $60 per barrel for WTI because inventories tell the real story—supply is outpacing demand, and that imbalance isn’t going away anytime soon.
