Oil Prices Hold Steady, Poised for Weekly Gain Amid Rising Demand and Supply Concerns
Oil prices remained stable on Friday, heading for a weekly gain as demand prospects in the U.S. and China improved, while concerns over supply disruptions in Russia continued to support the market.
According to Reuters, Brent crude futures dipped slightly by 3 cents to $76.45 per barrel at 0414 GMT, while U.S. West Texas Intermediate (WTI) crude fell 4 cents to $72.44 per barrel.
Despite the minor losses, both benchmarks have surged by over 2% this week, marking their biggest weekly advances since early January. Brent crude is set for a second consecutive weekly gain, while WTI is on track for its first weekly increase after four straight weeks of declines.
Growing Demand from the U.S. and China
Analysts at JPMorgan reported that global oil demand has averaged 103.4 million barrels per day (bpd) through February 19, representing a 1.4 million bpd increase. The surge is attributed to cold weather in the U.S. and a rebound in industrial activity in China as businesses resume operations following the Lunar New Year holiday.
Meanwhile, data from the U.S. Energy Information Administration (EIA) revealed that crude oil stockpiles increased last week, while gasoline and distillate inventories declined due to seasonal maintenance at refineries.
“Drawdowns in U.S. gasoline and distillate stockpiles, along with concerns over tight supplies in Russia, are supporting oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Geopolitical Tensions Weigh on Market Sentiment
Investor expectations of a potential Russia-Ukraine peace deal, which could have led to eased sanctions on Moscow, have weakened as tensions between the two nations persist.
Earlier this week, Ukrainian President Volodymyr Zelenskiy criticized U.S. and Russian negotiations that excluded Kyiv, following remarks by former U.S. President Donald Trump, who blamed Ukraine for initiating the conflict. However, after meeting with Trump’s envoy on Thursday, Zelenskiy signaled that Ukraine was ready to work toward an investment and security agreement with the U.S.
Adding to the uncertainty, U.S. Treasury Secretary Scott Bessent told Bloomberg that Russia might receive partial sanctions relief if it shows a willingness to negotiate an end to the war in Ukraine.
Supply Disruptions Keep Prices Elevated
Amid geopolitical tensions, oil supply concerns continued to support prices. Russia reported that flows through the Caspian Pipeline Consortium (CPC), a major crude export route for Kazakhstan, were reduced by 30%-40% on Tuesday following a Ukrainian drone attack on a pumping station.
Despite the attack, Kazakhstan managed to pump record-high oil volumes, though industry sources remain uncertain how the country achieved this amid damage to its main export route.
With a combination of rising demand, geopolitical uncertainty, and supply risks, oil markets remain volatile, keeping traders on edge as they monitor further developments.
