Crude oil markets experienced significant swings last week. Supply concerns, geopolitical developments, and shifting demand expectations drove the volatility. Early in the week, oil prices found support as supply-side risks emerged.
Russian crude production fell below its OPEC+ quota to 8.962 million barrels per day. U.S. sanctions on Russian oil shipments also created logistical bottlenecks. Iran faced increasing export restrictions due to new U.S. sanctions as well.
These disruptions, combined with technical strength, encouraged traders to push crude prices higher. However, optimism faded as demand concerns took center stage later in the week. U.S. crude inventories surged, with the American Petroleum Institute reporting a massive 9.4-million-barrel stockpile build.
This raised fears of oversupply. Federal Reserve Chair Jerome Powell maintained a cautious economic outlook, signaling that rate cuts were unlikely in the near term. Higher borrowing costs typically slow economic activity, reducing fuel consumption.
A potential peace deal between Russia and Ukraine emerged as another headwind for crude markets.
Crude market faces turbulent week
Reports suggested that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed interest in negotiations.
If a resolution is reached, sanctions on Russian crude could be lifted, adding barrels back to the global market. Despite bearish developments, some factors provided near-term support. Oil demand showed signs of resilience, with global consumption climbing to 103.4 million barrels per day.
A stronger-than-expected pickup in mobility and heating fuel demand in February also helped counterbalance supply concerns. Oil prices remain under pressure as rising U.S. crude inventories, a hawkish Fed, and potential geopolitical resolutions increase supply-side risks. Traders will be watching key technical levels closely.
These key levels at $70.80 and $69.55 form a support zone. Trader reaction to this zone will set the tone for the week. Unless fresh bullish catalysts emerge, the market is likely to remain defensive.
Traders should monitor developments in Ukraine, Fed policy signals, and refinery demand trends for further direction. At the time of writing, Brent crude was trading at $75.17 per barrel, with West Texas Intermediate changing hands for $71.38 per barrel. The outlook for oil markets remains cautiously optimistic, with analysts closely watching geopolitical developments and supply-demand dynamics.