Downward pressure on US equities last week spilled over into the oil market, with ICE Brent settling almost 3.9% lower. Though prices managed to creep back above US$70/bbl towards the end of last week, they’re now edging lower. Tariff uncertainty is a key driver behind the weakness. So is Chinese inflation data over the weekend showing that consumer prices fell 0.7% year on year in February. As a result, speculators remain bearish on the oil market. Positioning data shows speculators reduced their net longs in ICE Brent by 61,121 lots over the last reporting week to 159,425 lots as of last Tuesday — the smallest position since December.
The Saudis released their latest official selling prices (OSPs) for April loadings. It shows cuts across almost the board, although OSPs into the US were unchanged. The flagship Arab Light crude into Asia was cut by US$0.40/bbl to US$3.50/bbl over the benchmark. The reduction comes amid growing concern over the market balance with OPEC+ supply set to increase at a moment of increasing uncertainty over demand.
Chinese data on Friday showed that crude oil imports in the first two months of the year totalled 83.85m tonnes — or around 10.4m b/d — down 3.4% YoY and below the roughly 11.3m b/d imported in December.
It is a relatively data-heavy week for the energy calendar. On Tuesday, the Energy Information Administration (EIA) releases its latest Short Term Energy Outlook. It will include the EIA’s latest US oil and gas production forecasts and assessment of the global balance. In last month’s release, the EIA forecast US crude oil production would grow by around 380k b/d YoY in 2025 and 140k b/d YoY in 2026. Recent price weakness poses downside risks to these numbers. OPEC’s monthly oil market report will be released Wednesday, followed by the IEA’s monthly oil market report on Thursday.