Oil News: Traders Await Catalyst as Crude Tests Critical Pivot Area

Easing Middle East Tensions and Rising U.S. Stockpiles Pressure Prices

Crude oil prices ended the week lower as geopolitical tensions eased and U.S. crude stockpiles increased. Light Crude Oil Futures settled at $70.40, down 0.44%, as the Gaza ceasefire reduced the Middle East risk premium and investors weighed a potential peace deal in Ukraine. Reports of a new coronavirus in bats discovered by researchers in China also contributed to a cautious sentiment in the market​.

U.S. crude oil inventories rose last week due to seasonal refinery maintenance, adding to the bearish pressure. The Energy Information Administration reported that the inventory build, combined with a continued increase in U.S. oil and natural gas rigs, indicated potential supply growth in the coming weeks​.

Supply Disruptions in Russia and Kazakhstan Provide Market Support

While bearish factors dominated, supply disruptions provided a degree of support to crude prices. A Ukrainian drone attack on Russia’s Caspian Pipeline Consortium (CPC) pumping station led to a 30-40% reduction in oil flows, potentially removing up to 380,000 barrels per day from the market. Although Kazakhstan managed record-high oil volumes despite this disruption, uncertainty lingered over the sustainability of such output​​.

In the U.S., harsh winter weather impacted production in North Dakota, with output declining by up to 150,000 barrels per day. These supply-side challenges helped to offset some of the bearish influence from rising inventories​.

Geopolitical Uncertainty and Trade Policies Add Complexity

The market remained on edge as traders monitored potential changes to Russian sanctions. Ongoing diplomatic discussions between the U.S. and Russia in Saudi Arabia sparked speculation over possible sanctions relief, raising concerns about increased Russian oil supply returning to the market​.

Adding to the market’s uncertainty, U.S. President Donald Trump’s proposal for significant tariffs on global industries introduced a potential headwind for global economic growth and energy demand. Analysts cautioned that these trade policies could negatively impact economic activity in Europe and China, two key regions for oil consumption​​.

Robust Demand in U.S. and China Offers Bullish Potential

Despite headwinds, the demand outlook remained supportive. Global oil consumption averaged 103.4 million barrels per day through February 19, representing a 1.4 million bpd increase, according to JPMorgan analysts. Increased industrial activity in China and colder weather in the U.S. could further boost demand​.

Seasonal maintenance at U.S. refineries led to lower processing levels, but drawdowns in gasoline and distillate stocks contributed to a more balanced supply picture. Analysts also noted that diminishing hopes for a quick Russia-Ukraine peace deal helped revive buying interest in crude​.

Market Forecast: Neutral Outlook as Bullish and Bearish Factors Offset Each Other

Crude oil prices finished lower for the week, highlighting the mixed signals in the market. Easing geopolitical tensions, rising U.S. inventories, and potential sanctions relief on Russia created bearish headwinds, while supply disruptions and robust demand in key economies provided offsetting support.

The fundamentals appear to have largely neutralized each other, suggesting aUs balanced market outlook. The near-term direction of crude oil prices will likely hinge on fresh developments in geopolitical negotiations, U.S. inventory data, and global trade policies. For now, the market sentiment leans neutral, with neither bullish nor bearish forces showing a clear upper hand.

Technically, the market is currently testing a pair of 50% levels, which supports the neutral stance. A sustained move over $70.78 will indicate the presence of buyers, while a sustained move under $69.53 will signal increasing selling pressure.

More Information in our Economic Calendar.