March WTI crude oil (CLH26) closed down -0.04 (-0.06%) on Friday and March RBOB gasoline (RBH26) closed down -0.0093 (-0.46%).
Crude oil and gasoline prices fell on Friday amid concerns about energy demand after U.S. fourth-quarter GDP grew at a slower-than-expected pace. However, crude oil losses were limited due to a weaker dollar and geopolitical risks in the Middle East.
Friday’s weaker-than-expected US economic news was bearish for energy demand and crude oil prices. Fourth quarter GDP increased +1.4% (quarter-on-quarter annualized), below expectations of +2.8%. Additionally, the February S&P Manufacturing PMI fell -1.2 to 51.2, weaker than expectations for no change at 52.4. Additionally, the University of Michigan’s February U.S. Consumer Confidence Index was revised down by -0.7 to 56.6, below expectations for no change at 57.3.
Crude oil prices rose to a 6.5-month high on Thursday amid rising geopolitical risks in the Middle East. On Friday, President Trump increased pressure on Iran to reach a deal on its nuclear program, saying he is considering a limited military strike on Iran to force it to agree to a deal on its nuclear program. On Thursday, Trump said 10 to 15 days was “pretty much” the “maximum” he would allow for negotiations to continue, and “either we’re going to make a deal or it’s going to be unfortunate for them.”
Axios reported Wednesday that there is no evidence of a diplomatic breakthrough with Iran over a nuclear deal, and that any military operation against Iran would likely be a joint U.S.-Israeli campaign that could last weeks and be much broader in scope than last month’s U.S. operation in Venezuela. Meanwhile, the U.S. Department of Transportation recently issued a maritime advisory stating that U.S.-flagged ships should stay as far away from Iranian waters as possible when navigating the Strait of Hormuz. Iran is OPEC’s fourth-largest producer, and a U.S. attack on the country could disrupt its 3.3 million bpd crude output and potentially shut down the Strait of Hormuz, through which about 20% of the world’s oil passes.
Wednesday’s U.S.-brokered meeting in Geneva to end the war between Russia and Ukraine ended early when Ukrainian President Zelenskiy accused Russia of prolonging the war. Russia has said that the “territorial question” remains unresolved with Ukraine and that there is “no hope of achieving a long-term solution” to the war until Russia’s demand for territory in Ukraine is accepted. The prospect of a continued war between Russia and Ukraine will keep restrictions on Russian crude oil in place and is bullish for oil prices.
The increase in the supply of crude oil in floating storage is a bearish factor for oil prices. According to data from Vortexa, around 290 million barrels of Russian and Iranian crude oil are currently stored floating on tankers, more than 50% more than a year ago, due to blockades and sanctions on Russian and Iranian crude oil. Vortexa reported on Monday that crude oil stored on tankers that have been parked for at least 7 days fell -8.2% p/p to 86.95 million barrels in the week ending February 13.
An increase in crude oil exports from Venezuela is also boosting global oil supplies and is bearish for prices. Reuters reported last Monday that Venezuelan crude exports rose to 800,000 bpd in January from 498,000 bpd in December.
Last Tuesday, the EIA raised its 2026 US crude oil production estimate to 13.60 million bpd from 13.59 million bpd last month, and raised its 2026 US energy consumption estimate to 96.00 (quadrillion bpd) from 95.37 last month. Last month, the IEA cut its global crude surplus estimate for 2026 to 3.7 million bpd from last month’s estimate of 3.815 million bpd.
On February 1, OPEC+ said it would maintain its plan to pause production increases until the first quarter of 2026. OPEC+, at its November 2025 meeting, announced that its members would increase production by +137,000 bpd in December, but would then suspend production increases in the first quarter of 2026 due to the emerging global oil surplus. OPEC+ is trying to restore the entire 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production to restore. OPEC crude oil production in January fell -230,000 bpd to a five-month low of 28.83 million bpd.
Ukrainian drone and missile attacks have targeted at least 28 Russian refineries in the past six months, limiting Russia’s crude oil export capabilities and reducing global oil supplies. Additionally, since late November, Ukraine has stepped up attacks on Russian oil tankers, with at least six tankers attacked by drones and missiles in the Baltic Sea. Additionally, new US and EU sanctions on Russian oil companies, infrastructure and tankers have curbed Russian oil exports.
Thursday’s EIA report showed that (1) U.S. crude oil inventories as of February 13 were -6.0% below the 5-year seasonal average, (2) gasoline inventories were +3.3% above the 5-year seasonal average, and (3) distillate inventories were -5.8% below the 5-year seasonal average. US crude oil production in the week ending February 13 increased +0.2% p/p to 13.735 million bpd, just below the record of 13.862 million bpd for the week of November 7.
Baker Hughes reported Friday that the number of active U.S. oil rigs in the week ending February 20 was unchanged at 409, just above the 4.25-year low of 406 rigs recorded in the week ending December 19.
On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
