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Oil is On Track For Its First Monthly Decline Since November

By Mohamed Nabawy
28 Feb,2025
Oil is On Track For Its First Monthly Decline Since November

- Oil prices fell on Friday, heading for their first monthly decline since November, as concerns about global economic growth and fuel demand due to Washington’s threats of additional tariffs and other signs of a U.S. economic slowdown outweighed supply concerns.

- May Brent crude futures dropped by 31 cents, or 0.4%, to $73.26 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 31 cents, or 0.4%, to $70.04 per barrel. The front-month Brent contract, which expires later on Friday, was trading at $73.69, down 35 cents, or 0.5%.

- A long list of factors, including concerns over a U.S. economic slowdown, tariffs, and OPEC+ plans to increase supply in April, is reducing investors' risk appetite and weighing on prices. WTI remains well-supported between $65 and $70 per barrel based on technical charts.

- On Thursday, U.S. President Donald Trump said that 25% tariffs on Mexican and Canadian goods would take effect on March 4, along with an additional 10% duty on Chinese imports.

- Market participants are struggling to assess the impact of the flood of energy-related policy announcements from the Trump administration this month. Factors weighing on prices, particularly U.S. tariff measures, are currently dominating the outlook.

- U.S. economic data also affected investor sentiment, as weekly jobless claims rose more than expected, while other government data confirmed a slowdown in economic growth in the fourth quarter.

- However, oil prices climbed over 2% on Thursday as supply concerns resurfaced after Trump revoked a license granted to U.S. oil major Chevron (NYSE: CVX) to operate in Venezuela. Sources close to the negotiations indicated that the license revocation could lead to a new agreement between the U.S. producer and Venezuelan state oil company PDVSA to export crude to destinations other than the United States.

- Meanwhile, OPEC+ is debating whether to proceed with its planned oil output increase in April or freeze production, as its members struggle to assess the global supply situation due to fresh U.S. sanctions on Venezuela, Iran, and Russia, according to eight OPEC+ sources.

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