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Oil prices climbed in early Asian trading, heading for a third consecutive week of gains as cold weather in the U.S. and Europe boosts heating fuel demand.

Brent crude futures rose by 24 cents, or 0.3%, reaching $77.16 per barrel at 0138 GMT. Meanwhile, U.S. West Texas Intermediate crude futures increased by 26 cents, or 0.4%, to $74.18. Over the three weeks leading up to January 10, Brent has risen by 5.9%, while WTI has gained 6.9%

JPMorgan analysts linked the recent gains to rising concerns about supply disruptions caused by stricter sanctions, coupled with low oil inventories, freezing temperatures in much of the U.S. and Europe, and a more positive outlook on China’s stimulus efforts. The U.S. weather service predicts colder-than-usual temperatures in the central and eastern parts of the country, while many European areas are facing extreme cold, which is expected to continue into the early part of the year. JPMorgan analysts believe these factors will likely drive up demand

JPMorgan stated in a report on Friday that global oil demand is expected to rise by 1.6 million barrels per day in the first quarter of 2025 compared to the previous year, driven mainly by increased demand for heating oil, kerosene, and LPG. Additionally, the premium of the front-month Brent contract over the six-month contract reached its highest level since August, suggesting potential supply constraints amid growing demand.

Oil prices have surged despite the U.S. dollar gaining strength for six consecutive weeks. Normally, a stronger dollar puts pressure on prices, as it makes crude oil more expensive for buyers outside the United States. 

Further supply disruptions could occur as U.S. President Joe Biden is expected to impose new sanctions on Russia’s economy this week to support Ukraine’s fight against Moscow, ahead of President-elect Donald Trump’s inauguration on January 20. Russia’s oil industry has been a major focus of these sanctions.

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