On Wednesday, oil prices edged higher but gave up some earlier gains as the strengthening U.S. dollar exerted pressure on the market. Brent crude settled at $77.37 per barrel, up $0.32 (+0.42%), while U.S. West Texas Intermediate (WTI) rose $0.47 (+0.63%) to close at $74.72 per barrel. Both benchmarks had climbed over 1% earlier in the session before paring gains.
The dollar’s strength, fueled by inflation concerns, increased the cost of oil for holders of other currencies, dampening demand. Market sentiment was further affected by declines in European equity markets.
Supply concerns provided some support to prices. A recent survey revealed that OPEC oil production fell in December due to maintenance in the UAE, offsetting gains in Nigeria and other members. Russian oil output also dropped, averaging 8.971 million barrels per day in December, below target levels.
In the U.S., crude inventories declined last week, but significant increases in gasoline and distillate stocks added pressure to the market, according to the American Petroleum Institute. Analysts project lower average oil prices in 2025 compared to 2024, with BMI forecasting Brent crude to average $76 per barrel, down from $80 in 2024, citing rising production from non-OPEC countries.