Oil Price Forecast: Brent Breaks $70 While WTI Climbs Toward $65

Oil Price Outlook – Brent BZ=F Above $70, WTI CL=F In The Mid-$60s

Brent crude BZ=F is trading just above $70 per barrel after spiking to around $70.35, its highest level since late September, with front-month quotes such as $70.05–70.41 reflecting a 2–3% daily move and a gain of more than 15% for January. U.S. West Texas Intermediate CL=F is holding in the mid-$60s, around $64.80–65.13 after briefly topping $65, up roughly 10–13% over the month. The move is being driven by an aggressive Iran-related risk premium layered on top of genuine near-term tightness from U.S. winter-storm outages and Kazakh supply disruptions, while the forward balance still points to a first-quarter surplus and softening physical differentials in key benchmarks.

Iran Risk Premium And The Strait Of Hormuz Push Brent BZ=F Through $70

Brent BZ=F clearing the $70 handle is primarily a geopolitical repricing. Iran, OPEC’s fourth-largest producer with output near 3.2 million barrels per day, sits astride the Strait of Hormuz, through which roughly 20 million barrels per day of crude and condensate move. Markets are now assigning non-trivial odds to a U.S. strike on Iranian targets after Washington sent a naval group to the region and escalated threats over Tehran’s nuclear program, including discussion of targeted strikes on security forces and leadership figures designed to destabilize the regime. Traders are not yet pricing a realized closure of Hormuz, but they are paying for the option value that a miscalculation leads to a temporary disruption in flows. Citi’s estimate that the geopolitical premium embedded in Brent has expanded by about $3–4 per barrel fits the tape: strip that out and BZ=F looks more like a high-$60s market consistent with the forward surplus; add it back and spot comfortably trades $70–72. Talk that Brent could reach $72 over the next three months is simply an extrapolation that the current premium can persist or grow if rhetoric hardens further or if any attack damages export infrastructure.

*Weather, Tengiz And U.S. Outages Tighten Near-Term Supply For CL=F And BZ=F

The fundamental side of the story is not purely political. Winter Storm Fern cut as much as about 2 million barrels per day of U.S. crude output at its peak and temporarily drove Gulf Coast crude exports to zero on Sunday, according to shipping and production estimates. Those barrels are being restored, but the gap is real in weekly data and in physical flows. At the same time, Kazakhstan’s giant Tengiz field suffered electrical fires that forced a staged restart, with full production only expected back after several days, constraining volumes through the Caspian Pipeline Consortium. Combine a weather-driven hit to U.S. output and exports with a major CIS outage and the prompt market for both CL=F and BZ=F naturally tightens relative to where models would place it if production were running smoothly.

EIA Draws, Products And Demand – Why CL=F Feels Tighter Than The Q1 Surplus Models

Official U.S. data confirm this tightening. Crude inventories fell by about 2.3 million barrels in the week ending January 24, taking commercial stocks down to roughly 423.8 million barrels, around 3% below the five-year average for this point in the year. Consensus had been looking for a build of roughly 1.8 million barrels, so the realized draw is effectively a 4-million-barrel bullish surprise versus expectations. The American Petroleum Institute’s estimate the day before pointed to only a 247,000-barrel decline, so the EIA print sharpened the bullish impulse. Product data show a system being worked, not collapsing. Gasoline inventories rose by only 200,000 barrels after a 6-million-barrel build the previous week, with average daily gasoline production up to around 9.6 million barrels. Distillate inventories increased by about 300,000 barrels, while daily production dropped by roughly 268,000 barrels to 4.8 million barrels. Over the last four weeks, total products supplied – a proxy for demand – averaged 20.3 million barrels per day, just 0.1% below the same period a year ago. Gasoline demand averaged about 8.3 million barrels per day, while distillate demand sat around 3.7 million barrels per day, 4.8% lower year-on-year. For CL=F, this combination – crude draws, modest product builds, stable total demand and weaker distillate – translates into a prompt market that feels tighter than the headline “Q1 surplus” narrative would suggest, especially when you overlay weather-related outages.

Curve Structure, Saudi OSPs And Dubai Contango Show BZ=F Is Not In A Structural Shortage

While prompt BZ=F and CL=F are being bid on fear and disruptions, the deeper structure tells a different story. Dubai crude has flipped into contango, with later-dated cargoes priced above prompt barrels. Contango in Dubai, the anchor for much Middle Eastern sour trade, is a clear signal that near-term physical availability is comfortable; refiners are not chasing barrels aggressively enough to force a backwardated curve. Saudi Arabia is reinforcing that message via pricing. A survey of refiners points to Saudi Aramco setting the March official selling price for Arab Light to Asia at a discount for the first time since December 2020. You do not discount your flagship grade if you believe the region is structurally short; you discount when you need to defend market share into an environment of ample supply and price-sensitive buyers. Layer on the International Energy Agency’s projection that global supply will exceed demand by roughly 4.25 million barrels per day in the first quarter and the medium-term picture becomes clear: structurally, this is still a surplus market. The current print in BZ=F above $70 and CL=F in the mid-$60s is therefore best read as a temporary overlay of risk premium and weather on a fundamentally loose base, not the start of a sustained shortage regime.

Macro And Demand Signals – Breakevens And U.S. Data Support The Bid Under CL=F

The demand side, however, is robust enough to stop that surplus from crushing prices. U.S. five-year inflation breakevens have been climbing almost in a straight line since December, a classic indication that markets are upgrading their nominal growth and inflation expectations. That move typically coincides with stronger energy demand expectations. U.S. growth data have been outperforming forecasts, and weekly jobless claims remain low, pointing to a labor market that still generates income and spending. For CL=F, that macro backdrop matters as much as inventories: it supports gasoline demand near 8.3 million barrels per day, keeps total products supplied at 20.3 million barrels per day, and reduces the probability of a deep risk-off event that would rapidly deflate commodity exposure. Internationally, import flows from large demand centers such as India are tracking toward record volumes for January, signaling that refiners are using the current price band to secure supply rather than stepping away.

Technical Landscape For WTI CL=F – Trendline Support, $62.37 And $66.44 As Key Levels

From a technical standpoint, CL=F has shifted from a soft range to a more decisive uptrend. WTI futures have already broken above the late-2025 swing high around $62.37, triggering fresh buying from systematic and discretionary participants who use that level as a confirmation threshold. The move has extended into the mid-$60s, with price probing the next upside reference near $66.44. On the daily chart, an upward trendline now defines the impulse, with buyers repeatedly leaning into that line to reload length. For short-term positioning, the line and the $62.37 breakout level frame the bull case: as long as CL=F holds above that band on closing basis, momentum funds have no technical reason to capitulate. Sellers will watch the $66.44 zone as the first area to fade, with defined risk just above, aiming for a retrace back toward the low-$60s if Iran tensions ease or if U.S. supply normalizes faster than expected.

Technical Landscape For Brent BZ=F – $70–$72 As The Immediate Inflection Zone

Brent BZ=F has cleared the psychological and technical barrier at $70, printing intraday highs around $70.35–70.41 and delivering a monthly gain north of 15%, the largest in about four years. That zone now becomes the immediate battleground. On the upside, the $72 area aligns with bank commentary about the potential extent of the current premium and serves as a natural profit-taking target for longs who bought the breakout from the mid-$60s. On the downside, the former resistance at $68–$69, where Brent settled earlier in the week at about $68.40 with a daily gain of $0.83, should act as first support on any de-escalation headlines. A sustained weekly close above $70 would invite momentum and CTA flows that could extend the move toward the mid-$70s, especially if OPEC+ uses its February 1 meeting to reinforce a cautious supply stance. A quick reversal back below $68, by contrast, would signal that the market has overpaid for the Iran story and is reverting back toward fundamentals and the IEA surplus narrative.

OPEC+, Stock Draws And Diverging Signals Between Futures And Physical CL=F/BZ=F

OPEC+ remains a critical swing factor for both CL=F and BZ=F. Indications that the group plans to maintain its pause on output increases for March, to be formalized at the February 1 gathering, are helping anchor the back end of the curve. At the same time, the U.S. Energy Information Administration’s crude draw of 2.3 million barrels and the winter-storm-driven outages have given paper markets reason to push the front higher. Yet the physical side shows refiners in Asia likely to receive cheaper March Arab Light and Dubai in contango, implying comfort with prompt availability. This split is creating a classic divergence: futures pricing in geopolitical tails plus temporary outages; physical markets pricing in actual barrels, refinery margins and real freight costs. That divergence is inherently unstable. Either physical tightness actually appears – via Hormuz disruption, deeper U.S. production losses or extended Kazakh outages – in which case physical indicators will flip more bullish, or tensions ease and supply recovers, in which case the front of the futures curve will have to deflate to realign with a still-loose physical market.

Trading Stance – Oil CL=F And BZ=F Rated Hold, With Tactical Sell Bias Above $72 Brent And $66–$67 WTI

With Brent BZ=F around $70–70.40 and WTI CL=F in the mid-$60s, the balance of data argues for a disciplined Hold stance rather than an outright chase higher. The market is being pulled in two directions: a visible $3–4 per barrel Iran risk premium and real but temporary weather and outage-driven tightness on one side; contango in Dubai, a prospective Saudi Arab Light discount to Asia, an IEA-projected 4.25-million-barrel-per-day Q1 surplus and refinery-friendly physical conditions on the other. For directional positioning, that mix does not justify labeling the complex as a clean Buy at current levels. At the same time, strong U.S. macro data, stable total product demand at 20.3 million barrels per day and resilient gasoline consumption around 8.3 million barrels per day argue against an aggressive Sell call while CL=F holds above the $62–63 band and BZ=F holds above the high-$60s. The highest-conviction view is tactical: treat Brent rallies into the $72–75 zone and WTI into roughly $66–67 as opportunities to scale in short-term bearish positions, assuming no realized Hormuz disruption, while keeping core exposure in a neutral Hold until the geopolitical premium either crystallizes into actual supply loss or collapses on a policy de-escalation.

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