Price Move Summary

In week one, oil weakened as the Russia–Ukraine situation appeared to de-escalate on some fronts. That said, the market saw a modest bounce after the U.S. imposed a full blockade on Venezuela-linked tankers, reigniting supply-side concerns. Mid-week, a notable build in U.S. refined product inventories again pointed to soft demand and pushed prices lower. Later, a weaker-than-expected U.S. CPI print improved rate-cut expectations and risk appetite, supporting a mild rebound—but prices still ended the week down roughly 1–2%.

In week two, the Venezuela blockade overhang persisted early on. Mid-week, risk events—such as U.S. airstrikes in northwestern Nigeria and renewed uncertainty around the Russia–Ukraine war—lifted the perceived supply-risk premium and briefly supported crude prices. But toward the end of the week, thin holiday liquidity and the lack of fundamental improvement made the rally hard to sustain, and prices faded into the close.

Oil Data Update

Week 1: Refined products built again; Week 2 EIA data delayed due to Christmas

In week one, U.S. commercial crude inventories fell by about 1.3 mbbl in total, with the overall inventory structure still within a normal range. The SPR saw a small rebuild of roughly 0.3 mbbl, continuing its gradual recovery. On the product side, both gasoline and distillates posted another synchronized build—gasoline +4.8 mbbl and distillates +1.7 mbbl—reinforcing the picture of weak demand and weighing on prices. Meanwhile, the rig count continued to trend lower overall (down five rigs over two weeks), suggesting low prices are dampening upstream investment appetite.

The EIA’s official inventory release originally scheduled for 12/24 was postponed due to the Christmas holiday and is now set for Taiwan time 12/29 at 11:30 p.m. Key watch items for the delayed week-two data remain refined product inventories and any change in refinery utilization, to see whether market expectations on supply–demand are shifting.

Key News Commentary

U.S. maintains a full blockade on sanctioned Venezuela-linked tankers

Since 12/16, the U.S. has announced a “full blockade” on all sanctioned tankers entering or leaving Venezuela, with multiple vessels reportedly intercepted or detained. As of now, a third tanker, Bella 1, attempted to flee the blockade and remains under tracking.

On the surface, blocking Venezuela-related tanker flows can lift crude prices in the short run. But while Venezuela holds roughly 17% of global oil reserves, its actual production is only around ~1% of global supply and is largely heavy sour crude. Moreover, over 80% of its exports reportedly go to China, versus roughly ~16% to the U.S. Even if the U.S. tightens enforcement, China likely has the capacity to absorb displaced barrels.

The more important risk to watch is operational: with shipping constraints, Venezuela’s storage facilities and export terminals could fill quickly. If storage hits capacity, PDVSA—producing close to ~1 mbpd—may be forced to shut in production. That “storage-to-shut-in” mechanism is the key threshold where sanctions enforcement could turn into an actual supply-contraction event.

Zelensky meets Trump in Florida, continues to push a Ukraine peace plan

Under continued Russian military pressure and large-scale strikes, Ukraine’s President Volodymyr Zelensky met U.S. President Donald Trump on 12/28 (U.S. Eastern time) to discuss a potential path to end the war, though territorial concessions remain the biggest hurdle.

For now, negotiations appear to remain at the level of exploratory contact and public signaling—such as discussions of “territorial swaps” or potential leader-level meetings—without a clear ceasefire blueprint. Russia also launched major attacks and issued hardline statements ahead of the meeting, adding to uncertainty. Ukraine is seeking support from allies such as Canada and the EU, but faces constraints including opaque battlefield information, differing plan versions, and European concerns about the U.S. stance.

Overall, markets have become somewhat desensitized to Russia–Ukraine headlines and appear to assign a low probability to a peace deal, meaning most incremental news has limited pricing impact. But if the probability of a deal rises meaningfully, the more durable effect would likely be downside: a pathway to sanctions relief can directly affect supply and create more persistent downward pressure on crude than the typically short-lived upside spikes from conflict escalation.

Conclusion

Over the past two weeks, crude prices saw brief upside as geopolitical risk intensified. The Trump–Zelensky peace discussions on Sunday failed to resolve territorial issues, suggesting the Russia–Ukraine peace process remains stuck and unlikely to break through quickly. That keeps geopolitical risk alive and may offer some near-term support for oil.

Still, medium- to long-term pricing should remain dominated by fundamentals. Global supply looks relatively ample, and repeated builds in U.S. refined-product inventories point to slowing consumption and a lack of strong demand momentum. As a result, if tonight’s EIA release confirms further product inventory builds, oil is likely to stay range-bound into next week rather than entering a sustained uptrend.