(Oil Price) – This week in the crude oil market was a rollercoaster of price swings as bullish supply concerns clashed with bearish macroeconomic and geopolitical developments. The early week saw oil extend its gains on supply constraints from Russia and Iran, but prices reversed sharply midweek as rising U.S. inventories, a hawkish Federal Reserve, and renewed optimism about a resolution to the Russia-Ukraine war weighed on sentiment.
With crude prices now struggling to hold gains, traders are questioning whether bullish momentum can be sustained or if further downside is imminent.
Did Supply Disruptions Provide Enough Support for Oil?
The start of the week saw oil prices rise as supply constraints from Russia and Iran fueled bullish sentiment. Russian crude production fell below its OPEC+ quota, easing oversupply concerns and sparking a short-lived rally. Simultaneously, U.S. sanctions continued to disrupt Russian crude shipments to China and India, further reinforcing supply-side tightness.
Iran faced similar challenges, with new U.S. sanctions restricting its oil exports. These supply disruptions helped crude regain some footing, with traders initially optimistic about further upside. However, macroeconomic headwinds quickly shifted the market narrative.
How Did U.S. Crude Inventories and the Fed Impact Oil Prices?
Bearish pressure mounted midweek as oil prices dropped on reports of rising U.S. crude inventories. The American Petroleum Institute (API) estimated a massive build, raising fresh concerns about oversupply. This was confirmed by the Energy Information Administration (EIA), which reported a significant increase in crude stockpiles. While gasoline and distillate inventories saw declines, they were not enough to counteract the overall bearish sentiment.
At the same time, the Federal Reserve reinforced a hawkish stance, delaying potential rate cuts as inflation remained sticky. With borrowing costs expected to stay elevated, economic activity could slow, weighing on energy demand. The Fed’s reluctance to ease policy added another layer of uncertainty, making it difficult for oil bulls to sustain any meaningful rally.
Will Ukraine Peace Talks Add More Oil to the Market?
Adding to the bearish sentiment, news emerged that Russia and Ukraine were open to peace negotiations, potentially leading to a relaxation of Western sanctions on Russian crude. Former U.S. President Donald Trump indicated that both Vladimir Putin and Volodymyr Zelenskiy expressed interest in talks, with U.S. officials instructed to explore diplomatic solutions.
If peace talks materialize and sanctions ease, Russian crude could re-enter the global market in larger volumes, reinforcing bearish pressures. Brent and WTI both fell sharply midweek on the prospect of a supply increase, showing how sensitive the market remains to geopolitical shifts.
Will Delayed U.S. Tariffs Help Oil Prices Stabilize?
In a surprising development, U.S. President Donald Trump postponed the implementation of new trade tariffs until at least April, offering a temporary reprieve for markets concerned about global economic growth. Earlier in the week, the administration raised steel and aluminum tariffs, escalating fears of a trade war that could hurt energy demand. The delay in broader tariffs provided a slight recovery in oil prices, preventing deeper losses in the later part of the week.
However, the long-term impact remains uncertain, as China has already imposed new tariffs on U.S. crude imports in retaliation, limiting demand for American barrels in Asia. This could weigh on West Texas Intermediate (WTI) prices in the coming weeks.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The crude oil market remains at a pivotal juncture, with the broader weekly trend still pointing higher, but momentum weakening. This divergence suggests that while the long-term structure is intact, near-term risks are building. Traders are closely watching key technical levels to determine whether oil will stabilize or continue its slide.
In the short term, oil is trading within a defined range between $80.00 and $61.61, with immediate support at $70.80, which represents the 50% retracement level. The broader range extends from $53.33 to $85.78, with a key pivot at $69.55. Price action within this zone will be critical in shaping next week’s trading tone.
The market’s reaction to the $70.80–$69.55 support zone will likely dictate direction in the coming sessions. A sustained move above $70.80 could reinforce a bullish bias, signaling renewed buying momentum. However, a decisive break below $69.55 may shift the market into a bearish posture, accelerating selling pressure.
The $80.00 level remains a formidable psychological barrier, capping upside momentum in recent sessions. While previous attempts to push through this threshold have failed, any renewed strength in fundamentals could invite another test of resistance. However, the weekly chart suggests the path of least resistance is lower, with the $70.80–$69.55 zone acting as the last line of defense for bullish traders.
A retest of the $70.80–$69.55 area could attract fresh aggressive buying interest, as traders look for value in a technically oversold market. However, without a strong fundamental catalyst, buyers may remain hesitant, leaving oil vulnerable to further declines.
If prices fail to hold $69.55, the market risks deeper losses, with potential downside targets emerging at $64.78, $61.61, and even $59.55 in the near term. The next few trading sessions will be crucial in determining whether oil stabilizes or enters a new phase of downward pressure.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week ending February 21 is likely to be determined by trader reaction to $70.80 and $69.55.
Bullish Scenario
A sustained move over $70.80 will signal the presence of strong buyers. If this creates enough near-term momentum, we could see a possible retest of $74.94 over the near-term.
Bearish Scenario
A sustained move under $69.55 will indicate the presence of counter-trend sellers. This price level could act like support initially, but if it fails then look out to the downside with $64.78 the next likely target.
Market Outlook: Bearish Bias with Limited Upside Potential
As the week closes, crude prices are struggling to maintain bullish momentum, with downside risks mounting. Traders are closely monitoring fundamental and macroeconomic developments that could dictate the next move, as market sentiment remains fragile. Rising U.S. crude inventories, the Fed’s continued hawkish stance, and renewed optimism surrounding Ukraine peace talks all contribute to a bearish undertone, tilting the market toward increased supply concerns.
Unless a strong bullish catalyst emerges—such as unexpected supply disruptions or a surge in demand—oil prices are likely to remain under pressure in the coming days. The market will struggle to regain upward momentum without a shift in fundamentals.
Technically, the momentum could shift back to bullish if buyers can establish support at $70.80. However, if $69.55 fails as support then look for extended losses.
