Macroeconomic Fears Cap Oil Price Gains: Nymex Overview

Oil prices surged at the start of the week, driven by geopolitical tensions and supply concerns, but macroeconomic fears quickly reversed these gains. The Nymex overview for the week ending March 4, 2025, reflects this volatile market dynamic.



On Monday, February 18, 2025, oil prices rose sharply following drone strikes on Russian oil infrastructure. U.S. and Russian officials met in Saudi Arabia for talks aimed at ending the war in Ukraine, which could potentially boost Russian oil exports and ease sanctions. However, the possibility of talks between the U.S. and Russia aimed at ending the war with Ukraine could also lead to an increase in Russian oil exports, putting downward pressure on oil prices.

On Tuesday, February 19, 2025, the White House announced that President Trump still planned to impose 25% tariffs on Canadian and Mexican imports, as well as possible 10% tariffs on Chinese goods. These tariffs could hurt global economic growth and energy demand, leading to a retreat in oil prices. The Energy Information Administration (EIA) reported a solid increase in crude inventory, further pressuring oil prices.

On Wednesday, February 20, 2025, the EIA's weekly petroleum supply and demand data showed crude-oil stocks climbed by about 3.5 million bbl for the week ended Friday, February 15, 2025. Distillate inventories slid almost 5 million bbl, which gave ULSD futures a boost, while gasoline stockpiles jumped 3 million bbl. Any gains in petroleum futures might be limited due to uncertainty over a possible global trade war set off by President Trump's planned tariffs on major U.S. trading partners.



In conclusion, macroeconomic fears, such as those related to global economic slowdown and potential trade wars, can significantly influence oil prices and market dynamics in both the short and long term. Geopolitical events, such as drone attacks on Russian oil infrastructure and potential peace negotiations, can also impact oil prices and market sentiment. Changes in U.S. energy policies, such as tariffs on Canadian and Mexican energy imports, can have significant impacts on the U.S. oil market and global energy trade. Investors should closely monitor these factors to make informed decisions in the oil market.