Oil prices gained on Thursday, rebounding from two days of declines, as a larger-than-expected draw in U.S. crude inventories provided support while markets closely monitor significant developments in Venezuela. Brent crude futures climbed 38 cents, or 0.60%, to $60.34 per barrel, while U.S. West Texas Intermediate crude rose 37 cents, or 0.70%, to $56.36 per barrel.

US Inventory Data Supports Prices

U.S. crude oil inventories recorded a substantial decline of 3.8 million barrels for the week ended January 2, significantly exceeding market expectations and providing the primary catalyst for Thursday's price recovery. The Energy Information Administration reported that crude stocks fell to 419.1 million barrels, contrasting sharply with analysts' expectations for a 447,000-barrel rise according to a Reuters poll.

Market Dynamics and Trading Activity

Both oil benchmarks had fallen more than 1% for a second consecutive day on Wednesday, with market participants expecting ample global supply. Analysts at Morgan Stanley estimate a surplus of as much as 3 million barrels per day in the first half of 2026. The recent declines led some traders to take buying opportunities on Thursday.

"Pullback buying has nudged prices slightly higher, but persistent oversupply concerns are capping upside momentum. While markets are watching developments in Venezuela, the downward trend is likely to continue for now," said Mitsuru Muraishi, an analyst at Fujitomi Securities, forecasting that WTI will likely fall below $54.

Venezuela Oil Developments

Significant developments in Venezuela are adding complexity to global oil markets. Top U.S. officials stated that the U.S. needs to control Venezuela's oil sales and revenue indefinitely to stabilize the country's economy, rebuild its oil sector, and ensure it acts in America's interests.

The U.S. seized two Venezuela-linked oil tankers in the Atlantic Ocean on Wednesday, including one sailing under Russia's flag, as part of President Trump's aggressive push to dictate oil flows in the Americas. Venezuela will be turning over between 30 million and 50 million barrels of sanctioned oil to the U.S., according to Trump's social media post.

Supply Chain Implications

The Venezuela deal could require rerouting cargoes that were bound for China. Chinese independent refiners that consume much of the country's Venezuelan imports could switch to Iranian oil to make up the shortfall. Meanwhile, Chevron is in talks with the U.S. government to expand a key license to operate in Venezuela, enabling increased crude exports to its own refineries and sales to other buyers.

Refinery operations in the U.S. showed modest increases during the reporting period, with crude runs rising by 62,000 barrels per day and utilization rates remaining steady at 94.70%. Net U.S. crude imports increased by 563,000 barrels per day during the week, contributing to the overall supply dynamics.

U.S. Crude Oil inventories at the Cushing, Oklahoma storage hub have recorded a notable increase, rising to 728K barrels from the previous level of 543K barrels. This development represents a significant change in petroleum inventory levels at one of the most important oil storage facilities in the United States.

Inventory Level Changes

The latest data shows a substantial build-up in crude oil stocks at the Cushing facility. The inventory increase demonstrates the dynamic nature of oil storage and distribution in the U.S. energy infrastructure.

Market Significance

The Cushing storage hub serves as a critical delivery point for U.S. crude oil and plays an important role in oil pricing mechanisms. Inventory levels at this facility are closely monitored by market participants as they provide insights into supply and demand conditions in the domestic oil market.

The increase of 185K barrels represents a substantial addition to available crude oil stocks. Such inventory movements typically reflect various factors including production levels, refinery demand, and broader market conditions affecting petroleum storage and distribution patterns.

Storage Infrastructure Impact

This inventory build-up highlights the operational capacity and strategic importance of the Cushing storage facility in managing U.S. crude oil supplies. The facility's ability to accommodate significant inventory changes demonstrates its role as a key component of the nation's energy infrastructure.