Market Sentiment: Next week expectations are for added volatility in oil markets as headlines will continue to filter out from the White House. Traders are assessing potential impacts on energy markets from President Trump's proposed tariffs on China, the European Union, Canada, and Mexico, along with warnings of penalties for Russia if President Putin fails to work toward ending the Ukraine war.
IEA Oil Supply and Demand: In yesterday’s Oil Market Monthly Report, the International Energy Agency (IEA) reported upward revision to its oil demand forecasts, gauging 2025 global demand growth at 1.1 million barrels per day, up from a previous view of 1.05 million bpd as the agency continues to see supply growing faster. Their forecast shows global supply is on track to increase by 1.6 million bpd in 2025, even in the absence of the OPEC Countries plus Russia and other allies, known as OPEC+, unwinding output cuts. (As mentioned in prior reports, OPEC+ has implemented a series of cuts since 2022 to support the market and repeatedly delayed reviving output due to weak demand and rising supply outside the group. Its current plan calls for its latest round of cuts to be gradually eased from April.)
Ryazan Oil Refinery: Russia's Ryazan oil refinery (262,000 barrels per day) partially resumed oil processing and loading of motor fuels to railway tanks after staying idle for 18 days after the refinery suspended operations after an attack by Ukrainian drones on January 24 suffering damage to equipment, a hydrotreater, a railway loading rack and storage tanks. The refinery will operate at 50% capacity for the near future until the product loading rack is fully restored..
Market Overview: Oil prices are showing slight gains this morning, ending a three week losing streak. This recovery is attributed to rising fuel demand and the expectation that planned U.S. tariffs will be delayed until April, potentially easing trade tensions. Any further escalation in trade tensions, particularly related to new tariffs or retaliatory measures, could impact global economic growth and oil demand.
RBOB futures remained rangebound again this week even after a bounce in a few of this week's trading sessions, trading to the resistance value of $2.1498 (62% retracement) before losing steam and dropping back through support to finish the week flat. RBOB futures have not pushed out of the range, $1.90 to $2.15, since it started last fall as U.S. gasoline demand is within 1% of what it was this time last year. The next support level for RBOB futures is $2.0370, the 50% retracement level, with the next being the 100 day moving average of $2.0250. First level of resistance comes in at $2.1498, the 62% retracement level.
Energy prices this week exhibited more instability, with markets reacting to potential U.S. tariffs and the possibility of peace between both Israel and Hamas and Russia and Ukraine. Prices also faced pressure from U.S. inflation and indications the Federal Reserve will likely take a cautious approach to interest rate cuts in the coming months. Oversupply fears are also affecting prices as U.S. production remains strong and OPEC and its allies have signaled that they plan to begin unwinding earlier production cuts as soon as April 1st. Expect more volatility next week as the market remains sensitive to geopolitical and economic developments, which can lead to rapid price fluctuations.
