Oil prices are poised to break a three-week losing streak as a combination of factors, including rising fuel demand and U.S. tariff delays, supported market sentiment on Friday. Brent crude rose by 44 cents, or 0.6%, to $75.46 per barrel, while U.S. West Texas Intermediate (WTI) gained 37 cents, or 0.5%, reaching $71.66. Both oil contracts were on track for weekly gains of around 1%.
U.S. Tariff Delays Boost Market Sentiment
The recent rise in oil prices comes as U.S. President Donald Trump ordered officials to study reciprocal tariffs against countries imposing tariffs on U.S. goods. Trump’s decision to delay implementing these tariffs until April 1 has provided a sense of relief in the market, reducing fears of an imminent trade war.
Yeap Jun Rong, a market strategist at IG, highlighted the significance of this delay, saying, “Positive development on the trade front in light of U.S. tariff delays paves the way for some recovery in oil prices this morning, as the risk environment warms up to the prospects of further trade consensus being reached.”
Concerns Over Russian Oil Supply and Potential Peace Talks
Despite the positive news from the U.S., market participants remain cautious due to ongoing geopolitical concerns. One of the most significant uncertainties is the potential for Russian oil supplies to re-enter the market if Russia-Ukraine peace talks progress. Traders are worried that peace talks between Russia and Ukraine could lead to the lifting of sanctions on Russia, which could boost global energy supplies.
President Trump initiated discussions this week with both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, both of whom expressed interest in peace. The International Energy Agency (IEA) reported that Russian crude production increased slightly last month, indicating that Russian oil exports could continue if workarounds to U.S. sanctions are found.
Rising Global Demand for Oil
On the demand side, there’s been a surge in global oil consumption. According to JPMorgan, global oil demand has reached 103.4 million barrels per day (bpd), an increase of 1.4 million bpd year-over-year. The increase is attributed to a pick-up in mobility and heating fuels in the second week of February, indicating that the gap between actual and projected demand is narrowing.
“Heating fuel use is expected to rise again. Additionally, soaring gas prices in Europe could prompt a shift from gas to oil, boosting demand,” JPMorgan analysts noted in their report.
Conclusion
While oil prices are experiencing a short-term recovery, the market remains cautious about the future, particularly regarding the potential return of Russian oil supplies and the broader impact of global geopolitical developments. Still, the combination of tariff delays and a rising demand for oil suggests that prices could continue to stabilize in the near term.
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