Crude Market Faces Mixed Signals as Geopolitical Tensions Offset Demand Concerns

Oil trading remained volatile Thursday amid competing forces—geopolitical risks pushing prices up while weak U.S. demand indicators pulled sentiment down.

Brent crude inched higher by 0.4% to $62.89 per barrel in early Asian hours, with WTI crude rising 0.5% to $59.23 per barrel (as of 22:53 ET). The modest gains reflected underlying concerns about Russian oil supply disruptions following fresh military strikes on the Druzhba pipeline in Russia’s Tambov region. Stalled negotiations between Washington and Moscow also kept risk premiums intact, as markets worried about the potential longevity of sanctions affecting global crude flows.

Yet optimism proved limited. Data from the U.S. Energy Information Administration painted a different picture—crude stocks grew by 574,000 barrels for the week ending November 28, defying expectations of a 1.9 million-barrel decline. Gasoline inventories jumped 4.52 million barrels while distillates climbed 2.1 million barrels, signaling that fuel consumption in the world’s largest oil importer remains anemic. This supply glut in refined products undercut the bullish narrative driven by supply-side disruptions.

Rate cut optimism emerges as counterweight

Market participants are increasingly pricing in a Federal Reserve interest rate reduction of 25 basis points at next week’s policy decision, with odds now standing near 90%. Such a move would weaken the dollar and theoretically boost global energy consumption—a traditional support mechanism for crude valuations.

Recent economic weakness reinforced this expectation. The ADP employment report shocked analysts with a contraction of 32,000 private-sector jobs in November, while the ISM services gauge registered 52.6—its strongest reading in nine months. Notably, the accompanying inflation measures showed moderation, suggesting the Fed may have more flexibility to cut rates without stoking price pressures.

The oil market now awaits clarity on multiple fronts: whether crude demand recovers as monetary policy eases, whether geopolitical tensions escalate further, and whether the U.S. inventory buildup signals a temporary lull or a structural shift in consumption patterns.