2.5 Evening Crude Oil: Geopolitical Relaxation Suppresses Sentiment, Technical Indicators Show Weakening Signals

International oil prices edged lower in the Asian session, with short-term technical patterns clearly indicating signs of weakening. If substantive progress is made in US-Iran negotiations, oil prices are likely to experience a deep decline.

Regarding inventory data, US crude oil inventories for the week ending January 30 decreased by 3.5 million barrels to 420.3 million barrels. Distillate inventories also fell by 5.6 million barrels to 127.4 million barrels, while gasoline inventories are on the rise. It should be noted that the decline in crude oil inventories is not demand-driven; the main reason is that winter storms sweeping over more than 30 US states have caused production disruptions. Crude oil output has fallen to its lowest level since November 2024, with a peak reduction of 2 million barrels per day.

On the consumption side, the current rebound is only temporary. The decline in distillate inventories is driven by seasonal heating demand, which is a short-term boost and lacks sustainability. It cannot serve as a solid indicator of genuine demand improvement.

From a technical perspective, today’s daily candlestick for crude oil is likely to close with a long upper shadow, indicating a significant weakening of bullish momentum. The 1-hour upward structure has completely ended, and the price has broken below previous areas of high trading density. Key support levels to watch today are at $63.40. If this level is broken, oil prices may further decline toward the $61.50 range.