26 Feb 2025

Oil prices are expected to decline further as investors maintain optimism regarding a potential resolution to the Russia-Ukraine conflict. A global economic slowdown, exacerbated by tariffs imposed by former President Trump, poses additional challenges for oil prices. Market participants are also anticipating the release of the US EIA crude stock data, scheduled for publication at 15:30 GMT.

West Texas Intermediate (WTI) futures on the NYMEX are trading cautiously around a two-month low of $68.60 during European trading hours on Wednesday. The oil market is struggling to recover, as the demand outlook has deteriorated amid increasing hopes for peace between Russia and Ukraine, coupled with concerns regarding the tariff policies of former President Trump.

The White House has indicated that the President is striving to bring an end to the conflict in Ukraine as swiftly as possible. Furthermore, a meeting between President Trump and Russian President Vladimir Putin is anticipated soon to discuss negotiation terms.

In a related development, the US and Ukraine have reached an agreement on a draft minerals deal that lacks U.S. security guarantees and does not ensure a continued supply of weapons, as reported by Reuters on Tuesday. This agreement has been viewed by market participants as a constructive step towards achieving peace in Ukraine.

Positive advancements in the Russia-Ukraine peace process could create a challenging environment for oil prices, particularly if the US and Europe decide to lift sanctions on Russia, which would likely result in an increase in seaborne oil supplies in the global market.

Concerns regarding a global economic slowdown stemming from Trump's tariff policies have also placed downward pressure on oil prices. To date, Trump has implemented a 10% tariff on imports from China and a 25% tariff on aluminum and steel imports. He is expected to announce reciprocal tariffs and 25% levies on foreign automobiles, pharmaceuticals, and semiconductors by April.

In today's trading session, investors are particularly focused on the US Energy Information Administration (EIA) crude inventory data for the week ending February 21, with expectations of an increase in oil stockpiles by 2.34 million barrels.