Oil falls as Trump's energy emergency order stokes oversupply concerns

Oil prices fell on Tuesday after U.S. President Donald Trump declared a national energy emergency on his first day in office, raising concerns of higher U.S. output in a market widely expected to be oversupplied this year.

Brent crude futures were down 89 cents, or 1.1%, to $79.26 per barrel at 12:39 p.m. EST (1739 GMT). U.S. West Texas Intermediate crude futures for February delivery, which will expire after Tuesday's settlement, were down by $1.67, or 2.1%, at $76.21.

More actively traded March WTI futures were down 1.9% to $75.93 a barrel. There was no settlement in the U.S. market on Monday due to a public holiday.

"End of the day, there is no shortage of oil out there," Mizuho analyst Robert Yawger said, noting that U.S. oil production is at record levels and the OPEC+ producer group still has some 5.86 million barrels per day of output curtailed.

Shortage of demand

"What there is a shortage of is demand," Yawger said. "If the refiner doesn't need to make more fuel, they're not going to buy the crude."

The oil market is expected to be oversupplied this year, after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the United States and China.

The U.S. Energy Information Administration on Tuesday reiterated its expectations for oil prices to decline both this year and next.

"Strong global growth in production of petroleum and other liquids and slower demand growth put downward pressure on prices," EIA economists wrote on Tuesday.