Oil Market Overview: Recent Developments and Outlook

Recap: The oil market on Friday extended its gains in light of the Russian Deputy Prime Minister’s suggestion that OPEC+ could reverse its output increase after April. The market traded mostly sideways in overnight trading, posting a low of $66.12 and remaining within Wednesday’s trading range after it posted an inside trading session on Thursday. However, the market continued to trend higher after Russia’s Deputy Prime Minister, Alexander Novak, said that the OPEC+ producers will proceed with its April output increase but may then reconsider other steps. The market was also supported by comments made by U.S. Treasury Secretary Scott Bessent that indicated the U.S. aimed to reduce Iran’s crude oil exports to a trickle. Also, sources stated that the U.S. was considering a plan to inspect Iranian oil tankers at sea, continuing its efforts to cut Iranian oil exports to zero. The market retraced more than 50% of its move from a high of $70.60 to a low of $65.22 and breached Wednesday’s high of $68.10 as it posted a high of $68.22 by mid-morning. The market later erased some of its sharp gains during the remainder of the session. The April WTI contract settled up 68 cents or 1.02% at $67.04 but settled down 3.9% on the week. The May Brent contract settled up 90 cents at $70.36. The product markets ended the session in positive territory, with the heating oil market settling up 75 points at $2.2160 and the RB market settling up 75 points at $2.1087.

Technical Analysis: The crude market on Monday will remain supported by the reports of OPEC+ rethinking the announced increase in production and potential disruption in Iranian supplies as the Trump administration seeks to cut Iran’s oil exports. The market will also continue to weigh the ever changing Trump administration policy announcements on tariffs. The market is seen finding support at its low of $66.12, $65.22, $63.95 and $63.61. Meanwhile, resistance is seen at $68.22, $68.56 and $70.60.

Fundamental News: Russia’s Deputy Prime Minister, Alexander Novak, said that the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there are market imbalances. He said Russia produced less oil in February than the quota it agreed with the OPEC+ group.

Kazakhstan’s Energy Minister, Almassadam Satkaliyev, said the country is producing oil above its OPEC+ quotas and has tasked oil majors to cut their production. Kazakhstan is currently producing at a record high and well above its target.

Bloomberg News reported the U.S. Energy Secretary Chris Wright plans to seek up to $20 billion to accomplish President Donald Trump’s goal of refilling the nation’s depleted oil reserve to its maximum capacity. He said that the initiative would restore holdings “just close to the top” to maintain efficient operating status. Last month, President Donald Trump said that his administration would quickly fill up the Strategic Petroleum Reserve. The $20 billion request that Congress would have to approve would be enough to buy about 301 million barrels of U.S. crude at today’s prices and would increase the amount of crude in the reserve to less than 700 million barrels. The SPR currently holds about 395 million barrels of oil.

U.S. President Donald Trump said that he gave Canada and Mexico a break from his new 25% tariffs for goods compliant with the U.S.-Mexico-Canada Agreement because he wanted to help automakers, but added that the reprieve was a short-term measure and tariffs could go up over time. He said that on April 2^nd, reciprocal tariffs would be implemented to equalize any duty rates between the three countries.

Baker Hughes reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for the first time in six weeks. It said the oil and gas rig count fell by 1 to 592 in the week ending March 7^th. It said the oil rig count was unchanged at 486 this week, while gas rigs fell by one to 101.

IIR Energy said U.S. oil refiners are expected to shut in about 1.2 million bpd of capacity in the week ending March 7^th, cutting available refining capacity by 86,000 bpd.

Early Market Call – as of 8:55 AM EDT

WTI – Apr $67.56, up 52 cents

RBOB – Apr $2.1296, up 2.09 cents

HO – Apr $2.2232, up 73 points

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