Oil Prices Hold Firm After Five-Day Rally as Supply Risks and Strong U.S. Growth Support Market

BY COMFORT OGBONNA

Oil prices were little changed on Wednesday after climbing for five consecutive sessions, as traders balanced signs of strong U.S. economic momentum against fresh concerns over potential supply disruptions linked to Venezuela and Russia. The recent rebound reflects a shift in market sentiment following sharp losses earlier in the month, with geopolitical risks once again taking center stage.

Brent crude futures edged down by just 1 cent to $62.37 a barrel by 0326 GMT, while U.S. West Texas Intermediate crude inched up 1 cent to $58.39. Despite the muted movement on the day, both benchmarks have recovered roughly 6% since December 16, when prices sank to levels not seen in nearly five years amid fears of oversupply and weakening demand.

Market analysts say the recent rally has been driven by a mix of technical and fundamental factors. Thin trading conditions ahead of the holiday period have encouraged position squaring, while last week’s sharp sell-off failed to attract sustained follow-through from bearish traders. At the same time, rising geopolitical tensions, including heightened pressure on Venezuela and ongoing conflict affecting Russian energy infrastructure, have provided fresh support to prices. This backdrop has been reinforced by stronger-than-expected U.S. economic data, which has helped improve the outlook for global oil demand.

Recent figures showed the U.S. economy, the world’s largest consumer of oil, expanded at its fastest pace in two years during the third quarter. Growth was underpinned by resilient consumer spending and a notable rebound in exports, easing concerns that high interest rates would sharply slow economic activity. This data helped offset the impact of a reported increase in U.S. crude inventories, which might otherwise have weighed more heavily on prices.

Industry data indicated that U.S. crude stockpiles rose by 2.39 million barrels last week. Gasoline inventories increased by 1.09 million barrels, while distillate stocks climbed by 685,000 barrels. Although such builds typically signal weaker near-term demand, traders appeared willing to look past the figures, focusing instead on broader macroeconomic strength and supply-side risks. The official U.S. government inventory report is scheduled for release on Monday, later than usual due to the Christmas holiday, and may provide further direction to the market.

On the supply front, disruptions to Venezuelan exports remain a key driver of price support. More than a dozen oil tankers loaded with crude are currently waiting off the Venezuelan coast, reportedly seeking new instructions from their owners after U.S. authorities seized a sanctioned supertanker earlier this month and targeted additional vessels over the weekend. These actions have added uncertainty to global supply flows at a time when inventories in some regions are already tightening.

Adding to the tension, U.S. President Donald Trump recently announced what he described as a “blockade” of vessels under sanctions entering or leaving Venezuela, a move aimed at increasing pressure on President Nicolas Maduro.

Meanwhile, continued attacks between Russia and Ukraine on each other’s energy infrastructure have raised concerns about potential disruptions to exports from one of the world’s largest oil producers.

Despite the recent recovery, oil prices remain on track to post another quarterly decline. Forecasts of a supply surplus in the coming months continue to hang over the market, limiting the scope for sustained gains unless demand surprises to the upside or geopolitical risks escalate further.