Investing.com — Oil prices started 2025 on a bullish note, with breaking out of its late-2024 trading range and hitting its highest level since August last year, supported by tighter sanctions on Russian crude and colder weather forecasts.
Brent rose over $6 a barrel in early January, closing above $81 on Monday, as managed money participants added a net 90,000 contracts in WTI and Brent futures, marking the sharpest weekly increase in speculative length since October 2024.
Macquarie said the rally was triggered by new sanctions from the U.S. and EU on Russian oil exports, raising fears of supply disruptions and steepening market backwardation. WTI crude outperformed Brent, closing near $79, driven by cold weather risks and historically low Cushing storage levels.
WTI spreads have widened significantly, reflecting concerns over short-term supply shocks. “This addition in length is potentially signaling a shift to increasingly bullish sentiment among speculators,” analyst said.
However, refining margins softened globally, with seasonal stock builds pressuring U.S. Gulf Coast gasoline cracks, while European and Asian margins narrowed due to high inventory levels and atypical supply flows, respectively.
Macquarie expects geopolitical and weather-driven supply factors to remain key price drivers, alongside a potential increase in hedging activity as prices approach levels attractive to producers.
