Oil market stalls, prices stable: weak dollar curbs pressure from oversupply
Kyiv • UNN
Global oil prices are stable due to a weak dollar and optimism in financial markets, which offsets fears of a fuel surplus. Chinese stimulus and US GDP growth support the market, despite IEA forecasts of a significant surplus in 2026.
Global oil prices are showing stability, as a weakening US dollar and optimism in financial markets offset investor concerns about a significant fuel surplus. Despite forecasts of a surplus of raw materials in the first quarter of 2026, the market finds support in the expected stimulation of the Chinese economy and positive data on US GDP growth. This was reported by Bloomberg, writes UNN.
Details
As of January 23, West Texas Intermediate (WTI) crude oil futures are trading near the $60 per barrel mark, showing a trend towards a fifth consecutive weekly gain. Brent is holding at around $64 per barrel. The weakening of the US dollar has made oil more attractive to foreign buyers, which has helped to offset the negative impact of increased inventories in US storage facilities.
Chinese Stimulus and the American Economy
An important supporting factor was a signal from the Governor of the People's Bank of China, Pan Gongsheng, who hinted at the possibility of further interest rate cuts in an interview with Xinhua news agency.
As the world's largest oil importer, China directly influences quotes: the injection of liquidity into its banking system is seen by traders as a step towards increased demand. At the same time, revised data on the US economy confirmed that it is growing faster than previously predicted.
IEA Surplus Forecasts
Despite the current stabilization, the International Energy Agency (IEA) warned in its January report of a "deep surplus" in the first quarter of 2026. According to analysts, production could exceed demand by 4.25 million barrels per day. This surplus is due to the build-up of capacity by OPEC+ countries, as well as the activity of drilling companies in the US, Guyana, and Brazil, which creates long-term pressure on prices.