The closing prices of March WTI crude oil and March RBOB gasoline on Friday saw a slight decline, with March WTI crude oil closing down by -0.04 (-0.06%) and March RBOB gasoline closing down by -0.0093 (-0.46%). The decrease in prices was attributed to concerns about energy demand following the news that the US Q4 GDP grew at a slower pace than expected. Despite this, the losses in crude oil were limited due to a weaker dollar and ongoing geopolitical risks in the Middle East.
The weaker-than-expected US economic data released on Friday had a bearish impact on energy demand and crude oil prices. The Q4 GDP only rose by +1.4% (q/q annualized), falling short of the expected +2.8%. Additionally, the Feb S&P manufacturing PMI and the University of Michigan US Feb consumer sentiment index both came in weaker than anticipated, further adding to the negative sentiment surrounding energy demand.
However, geopolitical tensions in the Middle East provided some support for crude oil prices. President Trump’s statements regarding a potential military strike on Iran to force a deal over its nuclear program added to the uncertainty in the region. The possibility of a US attack on Iran could disrupt its crude production and impact global oil supplies, as Iran is OPEC’s fourth-largest producer.
The ongoing conflict between Russia and Ukraine also contributed to the bullish sentiment in oil markets. The failure of a US-brokered meeting in Geneva to end the war between the two countries highlighted the unresolved territorial issues, keeping restrictions on Russian crude in place and supporting oil prices.
On the supply side, mounting crude supplies in floating storage and increased crude exports from Venezuela are bearish factors for oil prices. The increase in US crude production estimates by the EIA and the decision by OPEC+ to pause production increases through Q1 of 2026 also added to the pressure on oil prices.
Despite these factors, the EIA report showed that US crude oil inventories were below the seasonal 5-year average, while gasoline inventories were above the average. US crude oil production remained near record highs, with the number of active US oil rigs remaining stable.
In conclusion, the complex interplay of supply and demand factors, along with geopolitical tensions, will continue to influence crude oil prices in the near term. Investors and traders will closely monitor developments in the Middle East, Russia-Ukraine conflict, and global oil supply dynamics to gauge the direction of oil prices in the coming weeks.
