Investing.com-- Oil prices moved in a tight range in Asian trade on Monday, as optimism over tighter supplies, amid stricter U.S. sanctions against Russia, was offset by caution before President-elect Donald Trump’s inauguration.
Crude prices steadied after clocking four weeks of strong gains, as traders bet on tighter global supplies after the U.S. outlined its strictest round of sanctions yet against Russia’s energy industry.
But gains in oil were curtailed by easing tensions in the Middle East, as Hamas and Israel exchanged hostages and prisoners over the weekend under a recently signed ceasefire, which also saw traders attach a smaller risk premium to oil.
Brent oil futures expiring in March rose 0.2% to $80.91 a barrel, while West Texas Intermediate crude futures rose 0.2% to $77.56 a barrel by 20:21 ET (01:21 GMT).
Trump inauguration in focus for tariffs, energy cues
Markets were now focused squarely on Trump’s inauguration later on Monday, with the President-elect having promised increased trade tariffs on top oil importer China.
Trump also reiterated plans to increase U.S. energy production during a Sunday rally, promising to lift regulations on the domestic energy sector.
Higher U.S. production- which already stood close to record highs of over 13 million barrels per day in 2024- could potentially offset the impact of recent sanctions against Russia by keeping global crude supplies underpinned.
Trump has also vowed to dole out expansionary policies during his term- a trend that could underpin demand in the world’s biggest oil importer. U.S. oil demand was a mixed bag in recent months. While cold weather did spur increased demand for heating fuels, it disrupted travel across large swathes of the country during the travel-heavy year-end holidays.
Oil markets weigh demand, supply outlook
Traders were speculating over a somewhat mixed outlook for oil supply and demand. While recent U.S. sanctions on Russia could limit global supplies, this could be offset by demand remaining soft, especially if Trump imposes steep trade duties on China.
China is the world’s biggest oil importer, and has seen a steady decline in its appetite for crude amid persistent economic weakness.
The People’s Bank of China kept its benchmark loan prime rate unchanged, as widely expected, on Monday.
But Beijing is expected to ramp up its stimulus measures in the face of trade headwinds under Trump. Recent data also showed China’s economy improved after Beijing doled out its most aggressive round of stimulus measures in late-2024.