MW Oil prices bounce after sliding in DeepSeek-inspired tech rout

By William Watts

Oil futures were up modestly Tuesday, bouncing a day after a selloff tied to the emergence of China startup DeepSeek, whose low-cost artificial-intelligence model sent tech shares down sharply and raised questions about whether the further development of AI will require as much power generation as previously assumed.

Price moves

-- West Texas Intermediate crude CL00 for March delivery CL.1 CLH25 rose 47 cents, or 0.6%, to $73.64 a barrel on the New York Mercantile Exchange.

-- March Brent crude BRNH25, the global benchmark, was up 51 cents, or 0.7%, at $77.59 a barrel on ICE Futures Europe. The more actively traded April contract BRN00 BRNJ25 gained 41 cents, or 0.5%, to trade at $76.59 a barrel.

Market drivers

Oil prices were moving higher as U.S. stock-index futures pointed to modest gains after Monday's tech rout. The steep fall for tech shares sparked a round of risk aversion that helped drag down crude, analysts said.

The pullback on Monday saw front-month WTI end the day down 8.6% and Brent down 6% from the roughly five-month highs set on Jan. 15. The retreat has come as investors weigh tariff threats and other policy measures by President Trump, as well as his call last week for the Organization of the Petroleum Exporting Countries to boost production.

Commodities Corner: Trump may have given the Saudis and OPEC the excuse they needed to boost oil production

Oil had rallied in December and early January after the Biden administration imposed wider sanctions on Russia's energy industry.

Since Jan. 15, prices for the next-due Brent contract had fallen around twice as much for the contract maturing in nine months, noted Barbara Lambrecht, commodity strategist at Commerzbank. This could indicate tensions triggered by the tightening of sanctions are easing, or that fears of further sanctions by the new administration are diminishing.

Reduced fears of further sanctions could be an indirect response to Trump's call on OPEC to boost output, she said. "After all, he is expressing concern about the level of prices, which argues against further massive sanctions in the short term."

That said, if traders were convinced Trump's appeal to OPEC was resonating, the prices of contracts with longer maturities in particular would have dropped more sharply, Lambrecht wrote.

"After all, it is rather questionable whether Trump will find a lever to put Saudi Arabia under pressure. Incidentally, nothing has been heard from the OPEC members so far," she said. "The pressure to act has diminished anyway with yesterday's price drop."

-William Watts

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January 28, 2025 07:15 ET (12:15 GMT)

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