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Oil prices fell on Tuesday as a stronger US dollar and rising American inventories weighed on the market, but robust Chinese demand, ongoing geopolitical tensions, and OPEC+ production freeze plans limited the losses.
The market appears poised for a period of cautious equilibrium, balancing supply pressures with sustained global demand.
Crude futures showed mixed movements: West Texas Intermediate (WTI) for February delivery slipped 0.3%, while gasoline contracts rose about 0.4%. The retreat came after the US Dollar Index reached a one-week high, putting pressure on commodities priced in dollars.
US crude oil inventories also added to the downward pressure. The Energy Information Administration (EIA) reported an unexpected increase of 405,000 barrels in crude stocks, against market expectations of a 2 million barrel decline. Gasoline inventories jumped by 2.86 million barrels, surpassing forecasts of 1.1 million barrels, while stocks in Cushing, Oklahoma, rose by 707,000 barrels.
Despite these setbacks, several factors helped cushion the declines. Ongoing geopolitical risks—including tensions in Venezuela, Nigeria, and Russia, as well as recent US strikes against ISIS targets in Nigeria—provided support for prices.
OPEC+ Production Strategy
Inside sources from OPEC+, the world’s most influential oil cartel, confirmed that the group plans to maintain its production freeze through the first quarter of 2026. This move aims to balance the market amid expectations of a record global surplus of 4 million barrels per day.
Meanwhile, strong Chinese demand continues to underpin the market. Data from Kpler indicated that China’s crude imports rose 10% month-on-month, reaching a record 12.2 million barrels per day as the country rebuilds its inventories.
The combination of a firm dollar, inventory pressures, geopolitical risks, and OPEC+ policy suggests that oil markets will navigate a delicate balance in the coming weeks. While downside pressures remain from elevated stock levels, robust global demand and supply management are expected to provide a floor for crude prices.
