Oil Prices Edge Higher, Set for Weekly Decline Amid Trump’s Energy Policies and Market Caution

Oil prices saw a modest rise on Friday but remained poised for weekly losses as markets reacted to U.S. President Donald Trump’s aggressive energy policies and ongoing global economic concerns.

Market Performance

• Brent Crude Futures: Up 0.4% to $78.61 per barrel, down nearly 3% for the week.
• West Texas Intermediate (WTI): Gained 0.4% to $74.93 per barrel, down close to 4% this week.

The weekly decline reflects an unwinding of long positions in oil futures as market participants adjust to shifting dynamics.

Trump’s Energy Policies and OPEC Demands

Trump’s energy strategy, unveiled during the World Economic Forum, has heavily influenced market sentiment:

1. OPEC Pressure: Trump demanded OPEC, particularly Saudi Arabia, lower crude prices.
2. U.S. Energy Boost: Declared a national energy emergency, rolling back environmental regulations to maximize domestic oil and gas production.
3. Trade Tariffs: Announced potential tariffs on the European Union, Canada, Mexico, and China, raising concerns about global trade and economic growth.

These measures could lead to increased U.S. supply, potentially offsetting OPEC’s production cuts and weighing on prices.

Market Caution and Key Influences

• Global Growth Concerns: New trade restrictions, if implemented, could slow global economic growth and dampen oil demand.
• Chinese Demand Woes: Weak projections for Chinese consumption continue to drag on crude futures.
• U.S. Crude Inventories:
  • The Energy Information Administration (EIA) reported a ninth consecutive weekly drawdown, with crude stockpiles falling by 1 million barrels to 411.7 million barrels, the lowest since March 2022.
  • Despite this bullish signal, the market remains overshadowed by broader supply and demand concerns.

Analyst Insights

• Yeap Jun Rong (IG): Expects oil to range between $76.50 and $78 per barrel as caution persists ahead of potential February tariffs.
• Priyanka Sachdeva (Phillip Nova): While U.S. inventory drawdowns provide short-term support, oversupply and weak demand prospects limit significant price recovery.

Outlook

The interplay between Trump’s aggressive energy policies, geopolitical developments, and economic uncertainty is likely to keep oil markets volatile. Short-term price movements may hinge on OPEC’s response to Trump’s demands and evolving trade tensions. Long-term recovery depends on signs of sustained global demand and inventory stabilization.