Oil prices slip a little lower; caution ahead of Trump’s inauguration By Investing.com

Investing.com– Oil prices fell slightly on Monday as optimism over tighter supplies amid tighter U.S. sanctions against Russia was offset by caution ahead of the inauguration of President-elect Donald Trump.

At 07:15 ET (12:15 GMT), March futures fell 0.2% to $80.61 a barrel, while crude futures fell 0.1% to $77.31 a barrel.

Crude oil prices retreated slightly after recording four weeks of strong gains, as traders awaited news from Washington, with volumes limited by the US holiday.

Trump’s inauguration in focus for tariffs, energy cues

Markets were focused directly on Trump’s inauguration after Monday, with the president-elect promising to increase trade tariffs on top oil importer China.

Trump also reiterated plans to increase US energy production during a rally on Sunday, promising to lift regulations in the domestic energy sector.

Higher US production – which was already close to record highs of more than 13 million barrels per day in 2024 – could potentially offset the impact of recent sanctions against Russia, maintaining global supplies of raw

Trump has also promised to make policies expansionary during his term – a trend that could support demand in the world’s largest oil importer. US oil demand has been a mixed bag in recent months. While the cold weather spurred increased demand for heating fuels, it disrupted travel in large portions of the country during the travel-heavy end-of-year holidays.

“There is a fair amount of uncertainty in the markets coming into this week, given the inauguration of President Trump and the series of executive orders that he has said he plans to sign. This combined with being a holiday in the United States today, it means that some market participants may have decided to take some risk off the table,” ING analysts said in a note.

Oil markets weigh demand, supply outlook

Traders speculated on a somewhat mixed outlook for oil supply and demand. While recent US sanctions on Russia could limit global supply, this could be offset by demand that remains soft, especially if Trump imposes heavy trade duties on China.

China is the world’s largest oil importer, and has seen a steady decline in its appetite for crude amid persistent economic weakness.

“Output data from China on Friday showed that refiners increased the amount processed by 1.3% year-on-year in December,” ING said. “However, for the full year 2024, refinery activity still fell by 3.6% YoY, reflecting weaker domestic demand. Production and trade numbers suggest that apparent oil demand in December came to a slight over 13.9mb/d, from 14m b/d the previous month, but up 0.6% YoY”.

The People’s Bank of China kept its benchmark lending rate unchanged, as expected, on Monday.

Beijing is expected to strengthen its stimulus measures in the face of trade headwinds under Trump. Recent data also showed that China’s economy improved after Beijing rolled out its most aggressive round of stimulus measures at the end of 2024.

Recent gains in oil have also been dampened by easing tensions in the Middle East, as Hamas and Israel exchanged hostages and prisoners over the weekend under a recently signed ceasefire that also saw traders attach a smaller risk premium to oil.

(Ambar Warrick contributed to this article).