By Paul Carsten

LONDON (Reuters) -Oil prices fell back slightly on Thursday, a day after settling at multi-month highs on the latest U.S. sanctions on Russia and a larger-than-forecast fall in stocks.

futures were down 37 cents, or 0.5%, to $81.66 per barrel by 1042 GMT, after rising 2.6% in the previous session to their highest since July 26 last year.

U.S. West Texas Intermediate crude futures slid 35 cents, or 0.4%, to $79.69 a barrel, after gaining 3.3% on Wednesday to their highest since July 19.

U.S. crude oil stocks fell last week to their lowest since April 2022 as exports rose and imports fell, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]

The 2 million-barrel draw was more than the 992,000-barrel decline analysts had expected in a Reuters poll.

The drop added to a tightened global supply outlook after the U.S. imposed broader sanctions on Russian oil producers and tankers. The sanctions have sent Moscow’s top customers scouring the globe for replacement barrels, while shipping rates have surged too.

The Biden administration on Wednesday imposed hundreds of additional sanctions targeting Russia’s military industrial base and evasion schemes.

On Monday, Donald Trump will be sworn in for his second term as U.S. president.

With oil at its current levels, that may lead to clashes with the Organization of the Petroleum Exporting Countries (OPEC) if Trump follows his previous playbook. During his first term he demanded the producer group rein in prices whenever Brent climbed to around $80.

OPEC and its allies, which collectively as OPEC+ have been curtailing output over the past two years, are likely to be cautious about increasing supply despite the recent price rally, said Commodity Context founder Rory Johnston.

“The producer group has had its optimism dashed so frequently over the past year that it is likely to err on the side of caution before beginning the cut-easing process,” Johnston said.

Limiting oil’s gains, Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners, according to an official.

On the demand front, global oil expanded by 1.2 million barrels per day in the first two weeks in 2025 from the same period a year earlier, slightly below expectations, JPMorgan analysts wrote in a note.

The analysts expect oil demand to grow by 1.4 million bpd year on year in coming weeks, driven by heightened travel activities in India, where a huge festival gathering is taking place, as well as by travel for Lunar New Year celebrations in China at the end of January.

Some investors are also eying potential interest rate cuts by the U.S. Federal Reserve in 2025 following data on an easing in core U.S. inflation – which could lend support to economic activities and energy consumption.

Investing.com –  prices could see headwinds in the near term due to broader economic uncertainty, although the metal has received support from global consumption outpacing supply, according to analysts at Bank of America.

A stronger US dollar and weak industrial activity has placed pressure on silver recently, while President-elect Donald Trump’s plans to impose strict import tariffs on Canada and Mexico — key suppliers of the metal to the US — have threatened to dislocate silver markets, the analysts said in a note to clients.

However, silver’s price has hovered at around $30 an ounce over the past nine months. By 04:02 ET (09:02 GMT) on Thursday, silver was trading up by 0.5% at $30.81.

The BofA analysts led by Michael Widmer argued that, in their view, this resilience has been tied to “consistent silver market deficits”, with “limited mine production growth […] a key source of price support” in particular.

Global consumption of silver outpaced production of the metal in both 2022 and 2023, and is expected to have done so yet again in 2024, research from BofA found.

They estimated that 37,083 tonnes of silver will be consumer this year, down by 0.4% from the projected amount in 2024, while output is seen edging up by 3.5% to 33,021 tonnes. Despite the change, the silver market would remain in deficit — a trend the BofA analysts anticipated will continue into 2026.

“[T]he silver market has been in deficit for a while now and those shortfalls finally count,” the analysts wrote. They noted that this support has been mirrored in some regions, with silver “trading at a premium” in India and consumers in China having to “pay up to source ounces.”

As a result, the analysts said silver has “solid fundamentals”, adding that they are “constructive further out” on the metal.

“Silver won’t lose its luster long-term,” they said.

Investing.com– Gold prices rose to a one-month high in Asian trade on Thursday, tracking a drop in the dollar and Treasury yields as mildly softer consumer inflation data spurred bets on lower interest rates this year. 

The yellow metal was now close to breaking above $2,700 an ounce for the first time since early December, amid some bets that softer inflation and a cooling labor market will allow the Federal Reserve to cut interest rates further this year. 

But more gains in gold were limited by diminished safe haven demand, after Israel and Hamas signed a U.S.-brokered ceasefire. Anticipation of more U.S. economic cues also limited losses in the dollar, as did uncertainty ahead of President-elect Donald Trump’s nomination on Monday. 

rose slightly to $2,697.45 an ounce, while expiring in February rose 0.4% to $2,728.0 an ounce by 00:01 ET (05:01 GMT). 

Gold benefits from CPI relief, dollar down 

Gains in gold came largely after consumer price index inflation data for December read slightly lower than expected. Headline was in line with estimates, while just missed expectations. 

But the print- which came just a day after softer-than-expected data- spurred increased bets that easing U.S. inflation will give the Fed more confidence to cut rates this year. The central bank is projected to cut rates twice in 2025, half of its total reductions in 2024.

Lower rates benefit gold by reducing the opportunity cost of investing in non-yielding assets. 

The slid from a two-year high on the CPI data, but still retained a bulk of its run-up in the past month. 

Gold gains limited as safe haven demand eases, econ. data looms 

But gains in gold were limited by easing safe haven demand, especially after the Israel-Hamas ceasefire. The Middle East conflict had been a key driver of gold demand in 2024. 

The yellow metal was also pressured by a rally in broader risk-driven assets, as the prospect of U.S. rate cuts boosted risk appetite.

Traders were still on edge before more key economic readings due in the coming days. U.S. retail sales and jobless claims data is due later in the day. 

Other precious metals were mixed, having clocked muted gains on this week’s inflation readings. fell 0.1% to $948.15 an ounce, while rose 0.3% to $31.622 an ounce.

Among industrial metals, copper prices steadied after a series of strong gains in recent sessions. Benchmark on the London Metal Exchange rose 0.3% to $9,192.50 a ton, while March were flat at $4.3957 a pound.

Focus is now squarely on Chinese data for the fourth quarter, due on Friday, for more cues on the world’s biggest copper importer.