Oil markets are experiencing a winter rally, driven by a combination of shifting supply dynamics and robust seasonal demand. Stricter sanctions on Russian and Iranian crude have led Chinese and Indian refiners to increase their purchases of Middle Eastern oil, providing support for prices despite a broader narrative of ample supply. Additionally, elevated utilization rates at US refineries are drawing extra barrels from the Cushing hub in Oklahoma, reducing inventories and reinforcing the perception of constrained supply. These factors, coupled with refinery restarts post-maintenance and stockpiling ahead of the driving season, are contributing to upward pressure on oil prices.
The Brent forward curve has flattened, yet the market structure remains in backwardation, indicating expectations of tighter supply in the near term. While $100 oil is not a base-case scenario for most analysts, the current conditions lay the groundwork for a notable rebound, at least in the short term. As of 05:51 on January 10, Brent crude is trading at $78.73, up from its last close of $76.92, catching under-positioned bears off guard as the winter rally takes hold.