21 Feb 2025

• WTI struggles to capitalize on a four-day-old recovery from the YTD trough touched this week. 
• Hopes for a solid US fuel demand and concerns over supply disruptions in Russia lend support.
• The mixed fundamental backdrop warrants caution before placing aggressive directional bets.
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West Texas Intermediate (WTI) US Crude Oil prices are fluctuating within a limited trading range during the Asian session on Friday, consolidating the gains achieved over the previous four days. The commodity is currently trading near the $72.40 mark, slightly below the one-week peak reached on Thursday, and appears to be on the verge of ending a four-week decline.

The Energy Information Administration disclosed on Thursday that US Crude Oil inventories increased, while gasoline and distillate stocks decreased last week. This development, coupled with apprehensions regarding potential supply disruptions in Russia, provides a supportive backdrop for the commodity. Moreover, prospects for a peace agreement between Russia and Ukraine seem to have diminished due to escalating Ukrainian drone strikes on Russian oil facilities.

In addition, the recent decline of the US Dollar (USD) to its lowest level since December 10, which typically bolsters USD-denominated commodities, further supports Crude Oil prices. Nevertheless, concerns that US President Donald Trump's trade tariffs may adversely affect the global economy and reduce fuel demand are causing traders to exercise caution, thereby limiting aggressive bullish positions on the commodity.

Moreover, indications of weakening demand from the Eurozone and China necessitate a careful approach before anticipating a continuation of the modest recovery from the year-to-date low of approximately $70.15 reached earlier this week. Traders are now awaiting the release of global flash PMIs, which could offer new insights into economic conditions and create short-term trading opportunities related to Crude Oil prices.