Oil prices saw a slight decrease on Monday, continuing the downturn from the previous week, as disappointing U.S. economic data intensified worries about weaker oil demand. Investors are also considering the potential effects of a peace agreement between Russia and Ukraine.
Brent Oil Futures dropped 0.3 percent to $74.24 per barrel as of 20:43 ET (01:43 GMT), while West Texas Intermediate (WTI) crude futures fell 0.4 percent to trade at $69.97 per barrel. Both contracts saw a minor decline last week, with significant losses noted on Friday. Oil prices had seen an uptick earlier in the week due to various supply disruptions, but the momentum waned as investors assessed the implications of a potential peace deal between Russia and Ukraine.
New York and London’s primary crude oil indexes are on track for their strongest weekly gains since early January. Olly Hansen, head of Commodity Strategy at Saxo Bank, stated that the market appears to have adopted a neutral yet tense price stance, with Brent trading near the midpoint of the projected annual range of $65 to $85.
Weak U.S. data sparks demand concerns
Recent economic indicators from the U.S. have raised alarms about a possible slowdown, adversely affecting oil prices. Friday’s data revealed that the Services PMI fell to 50.4 in February 2025, down from 52.7 in January, signaling minimal growth in the private sector.
Furthermore, the University of Michigan’s consumer sentiment index plunged to 64.7 in February, marking a 15-month low, as households became increasingly anxious about proposed tariffs and rising inflation. These trends indicate a slowdown in economic activity, leading to expectations of diminished energy demand, which has contributed to the recent drop in oil prices.
Meanwhile, the U.S. is actively engaging in peace negotiations between Russia and Ukraine, striving to address the ongoing conflict that has significantly influenced global energy markets. High-level discussions have included U.S. President Donald Trump’s interactions with international leaders to promote dialogue.
Hansen highlighted that some regions are experiencing supply disruptions, notably from Kazakh production following a Ukrainian drone attack on Russia, while others may see increases. A key development is the potential resumption of exports from the Iraqi Kurdistan region via the Kirkuk-Ceyhan pipeline, which previously transported around 450,000 barrels per day before being halted in 2023.
However, Ukrainian President Volodymyr Zelenskyy has voiced concerns regarding the negotiations, underscoring the importance of Ukraine’s direct participation in any peace agreement. A successful resolution could result in the lifting or easing of sanctions imposed on Russian energy exports, which might increase the global oil supply.
Additionally, the reintegration of Russian gas into the European market could lead to lower natural gas prices and reshape the competitive environment for LNG suppliers.
Read more: Oil prices set for 3 percent weekly gain on Russia supply concerns, strong U.S. demand
Supply disruptions cap losses
Oil prices had seen an increase last week as the Caspian Pipeline Consortium (CPC), a crucial route for Kazakh oil exports, faced a reduction in flows by 30-40 percent following a Ukrainian drone strike on Russia’s Kropotkinskaya pumping station.
Adding to the supply concerns, recent media reports have suggested that the OPEC producer group and its allies, known as OPEC+, are contemplating postponing planned oil production increases. This has heightened apprehensions about potential supply disruptions in the global market.
Initially, the group had intended to commence monthly output hikes in April 2025; however, discussions are currently underway to delay these increases.
Conflicting signals from Washington complicate the market landscape. Some comments suggest a rise in U.S. production, while others express concerns about global growth and demand. Meanwhile, OPEC+ is anticipated to approach its upcoming decisions with caution, likely maintaining current production levels while emphasizing the importance of compliance, especially amidst uncertainties regarding U.S. policies and the actions of major producers like Russia and Iran, further explained Hansen.
