On the 21st of January, local time, international oil prices experienced a significant drop, with West Texas Intermediate (WTI) crude oil falling more than 1.5% at one point, while Brent crude oil registered a decline of 2%. By the close of trading on that day, WTI for February delivery had decreased by $1.99, settling at $75.89 per barrel, marking a drop of 2.56%. Concurrently, Brent crude for March delivery fell by $0.86, ending at $79.29 per barrel, reflecting a decline of 1.07%.

In a notable shift in the United States' energy policy landscape, the newly inaugurated president has expressed a strong preference for traditional energy industriesReports indicate that on his first day in office, he declared a nationwide energy emergency for the United StatesThrough an executive order, federal agencies have been granted the authority to invoke emergency powers to expedite energy production and enhance energy infrastructure development

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This order also encourages exploration and production of energy on federal lands and waters.

The president stated, “The inflation crisis has been spurred by rampant overspending and soaring energy pricesThis is why I am announcing that the nation is entering into a state of energy emergencyWe will ramp up oil drilling, reduce energy prices, and export American energy to countries around the globe.” Alongside these pronouncements, he intends to lift the ban on liquefied natural gas (LNG) exports, thus increasing the volume of U.SLNG exports, which could elevate America’s competitiveness in the global energy market.

Market analysts believe that this move may lead to an increase in global gas supplies, influencing both international energy prices and the stability of supply chainsMajor American energy companies stand to benefit from this updated energy policy under the new presidency

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At the start of the year, the energy sector of the U.Sstock market has been performing impressivelyData compiled by reporters reveal that the energy sector of the S&P 500 index has led the way, showing a remarkable gain of 9.18% from the beginning of the year through January 17, with 11 stocks within the sector surging over 10%.

However, on the evening of January 21, energy stocks slipped marginally, with Devon Energy, Coterra Energy, and Occidental Petroleum each declining by over 2%, while Chevron and Hess saw a reduction exceeding 1%.

Looking forward, analysts are questioning how oil prices will trend in the near futureVarious factors are contributing to the recent decline in crude oil prices, including changes in supply and demand dynamics, market sentiment, currency fluctuations, and technical correctionsWith a strengthening U.Sdollar, investors holding other currencies find the cost of purchasing oil to be higher.

Chen Xinyi, a crude oil researcher at COFCO Futures Co., noted that this year has witnessed a slight increase in international oil prices, peaking around $80 per barrel, primarily due to favorable factors such as weather and geopolitical risks compounded by enhanced market sentiment

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Nonetheless, she cautioned that the short-term supportive factors lack sustainable momentum, particularly since we are not currently in a peak demand season for crude oil, leading to a period of inventory accumulation for refined productsAs a result, international oil prices have been bouncing within a wide range recently.

Currently, international oil prices remain above $70 per barrel, marking a retreat compared to the year's onset, thus forming a pattern of highs and subsequent declinesAn Ziwei, a senior analyst at Dongzheng Futures Co., highlighted two primary reasons for this trend: first, market expectations for major production regions to continue widespread production cuts in the first quarter; second, an increase in market uncertainty surrounding the supply side“There’s an anticipation that the U.Swill maintain increased production, particularly with shale oil production potentially continuing to grow significantly, hence the expectation that international oil prices will likely remain volatile in the short term,” she stated.

In the near term, the market's trading focus is still concentrated on bullish factors, though whether there will be a trend-based investment opportunity requires further fundamental indicators

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