Tariffs and Output Weigh on Energy Commodities

Crude Oil

WTI futures fell towards $70

• WTI crude oil futures lost 0.8% to settle at $70.7 per barrel on Friday, down about 0.4% on the week, as hopes for a peace deal between Russia and Ukraine tempered supply concerns.
• The potential removal of sanctions on Moscow could increase global energy supplies, though the IEA noted that Russian oil exports might persist through alternative channels.
• On the positive side, the IEA lowered its global oil surplus projections, highlighting strong demand in Asia and sanctions on OPEC+ nations.
• Meanwhile, delays in US reciprocal tariffs provided stability to oil prices, as investors grew more optimistic about potential trade agreements.
• Also, the latest EIA data showed a larger-than-expected rise in US crude inventories, up by 4.1 million barrels.

Gasoline

Gasoline prices supported by declining supply

• US gasoline futures rose toward $2.10 per gallon in early February, tracking higher oil prices and expectations of tighter global supply.
• The US escalated sanctions on Iran earlier in the week, potentially restricting its oil flows, while Saudi Aramco sharply raised March crude prices, driven by rising demand from China and India, as well as supply disruptions from Russia.
• Market sentiment remained cautious due to trade tensions, with China retaliating against US tariffs by imposing levies on American coal, LNG, and crude oil, heightening concerns over reduced global demand.
• However, the market faced additional pressure from EIA data showing a larger-than-expected build in US gasoline stocks, which grew by 2.23 million barrels—well above the forecast of a 1.2 million increase.

Natural Gas

Natural gas futures top 3 week high

• US natural gas futures climbed to $3.7/MMBtu, the highest in three weeks, driven by rising LNG exports, lower output, and colder weather forecasts.
• Gas flows to the eight major U.S. LNG export plants averaged 15.3 bcfd so far in February, up from 14.6 bcfd in January, nearing record levels.
• Meanwhile, extreme cold froze some wells, causing daily gas output to drop by 3.7 bcfd over the past week to a two-week low of 103.0 bcfd.
• Additionally, the EIA reported that US utilities withdrew 100 bcf of natural gas from storage in the week ending February 7, reducing total inventories to 2,297 bcf, more than the expected 92 bcf draw.