Brent crude advanced for a fourth consecutive session, trading near US$75 a barrel, while West Texas Intermediate (WTI) rose to over US$72. The increase follows an industry report by the American Petroleum Institute indicating US crude stockpiles fell by 1.4 million barrels last week. If confirmed by government data on Thursday, this would mark the sixth straight inventory draw.

Despite the recent gains, oil has remained in a narrow trading range since mid-October, with Brent posting a slight annual decline and WTI ending 2024 nearly unchanged. Analysts cite market concerns over an impending supply glut and the uncertainties tied to a second presidential term for Donald Trump, which could complicate OPEC+ efforts to increase production.

Robert Rennie, Head of Commodity and Carbon Research at Westpac Banking Corp, noted, "The risks for Brent are to the upside through the first quarter, with a push into the US$75 to US$80 region likely. The second half of the year looks to be about the risks of rising supply and weak demand."

Geopolitical tensions in the Middle East and Ukraine persist, with potential flare-ups capable of offering short-term support for oil prices. Additional sanctions impacting Iranian and Russian crude exports could also spur demand for alternative supplies from other regions, including the Middle East.

China's economic recovery adds another layer of uncertainty to the market. While recent data shows signs of improvement, the country's rapid adoption of new energy vehicles continues to dampen gasoline demand.

As of typing, Brent for March settlement rose 0.5% to US$75.00 a barrel, while WTI for February delivery gained 0.5% to US$72.09 a barrel.

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