WTI prices fell as US President Donald Trump called Russian President Vladimir Putin and Ukrainian President Vladimir Zelensky to discuss ending the war in Ukraine. As of now, WTI crude oil is quoted at $70.57 and Brent crude oil is quoted at $74.88.
US January CPI data exceeded expectations across the board, and short-term interest rate futures traders cut the Fed's rate cut this year to about 26BP.
Trump: May sign a reciprocal tariff executive order on Wednesday local time; may meet with Putin in Saudi Arabia; hope to close the Ministry of Education immediately.
The US and Ukrainian presidents had a call for about half an hour, and the two sides discussed the possibility of achieving peace between Russia and Ukraine; the US and Russian presidents talked for more than an hour, and Trump said the call was productive. Both sides hope to end the conflict between Russia and Ukraine and agree to work closely and visit each other's countries.
Before Powell spoke, Trump urged the Federal Reserve to cut interest rates, saying that this move would complement the upcoming tariff policy.
Powell's second day of hearing: The latest data shows that inflationary pressures have eased but have not yet achieved the target; there are some concerns about Treasury liquidity; there is still a long way to go to shrink the balance sheet; the Federal Reserve may have to adjust interest rates in response to tariff policies; do not want to hinder banks from providing cryptocurrency services to legitimate customers.
Driven by the C wave, U.S. crude oil prices are expected to fall to the range of $68.41 to $69.71 per barrel. This wave has fallen below the 50% forecast level of $70.76, and there is a high probability of extending to $69.71. Assuming that this wave is the same as the previous wave A, the contract may fall to $66.31, the 100% level. The resistance level is $71.57, and a break above it may rise to the $72.26-72.83 range.
On the daily chart, the contract has fallen below the support level of $71.19. This not only opens the way to $68.93, but also eliminates the chance of continuing the upward trend from $65.27.
Oil prices fell slightly in early Asian trading as traders digested US CPI data and signs of supply pressure. Higher-than-expected inflation reinforces the view that the Federal Reserve is likely to maintain high interest rates, putting pressure on dollar-denominated commodities. He added that Trump's remarks about negotiating an end to the conflict in Ukraine also sparked speculation about easing restrictions on Russian oil producers. "If this becomes a reality, it will reduce Russia's supply risk and put bearish pressure on crude oil prices." He said that the EIA raised its estimate of US crude oil production in 2025, adding another supply-side factor.
WTI crude oil continued to close lower on Wednesday, with US President Trump saying he had started talks with Russian President Vladimir Putin on ending the war in Ukraine, and the market expected that the risk of crude oil supply disruptions in the region might be reduced.
This geopolitical development exacerbated the decline that was triggered earlier by US inflation data. The US CPI rose 3.1% year-on-year in February, higher than the expected 2.9%, which pushed the US dollar to strengthen briefly, making commodities denominated in US dollars less attractive.
The prospect of a ceasefire between the US and Russia has raised questions about the sustainability of US sanctions. The current sanctions have had an initial impact on Russian crude oil transportation: millions of barrels of crude oil on the Pacific coast are stranded due to sanctions on transport tankers. But the US Energy Information Administration (EIA) said on Tuesday that Russia's crude oil production is unlikely to fall significantly. .
In my opinion, the US involvement in the Russia-Ukraine conflict means that its sanctions on Russia may be lifted earlier than expected, but for now, the market has not fully digested the possibility of a full lifting of sanctions, which means that oil prices have further room to fall.
So far, oil prices have fallen for three consecutive weeks, mainly due to the impact of Trump's tariff policy. OPEC+ said in its latest report that US trade policies could exacerbate market volatility. Today, investors also need to pay attention to the latest monthly energy outlook report from the International Energy Agency (IEA).
At the same time, as of the week of February 7, US EIA crude oil inventories accumulated for three consecutive weeks, higher than expected but slightly lower than the earlier announced API crude oil inventory change guidance. After the data was released, the decline in WTI crude oil futures actually narrowed. However, the situation of sufficient supply has further emerged, and the recent spread of WTI crude oil has narrowed to around 13 cents, the lowest level since November last year.
On Wednesday, WTI crude oil futures closed down for two consecutive days, mainly due to multiple factors such as the continuous increase in US EIA crude oil inventories, the fading of geopolitical risk premiums, and expectations of monetary policy tightening.
As of the week of February 7, the US EIA crude oil inventory rose beyond expectations and accumulated for three consecutive weeks. Gasoline inventories unexpectedly fell, and distillate inventories increased slightly, reflecting the divergence of demand for end products.
The rapid decline of geopolitical risk premium exacerbated the decline due to increased inventories. US President Trump claimed that he had an "efficient call" with Russian President Putin on "immediately ending the Ukrainian war", triggering market speculation that US-Russia energy sanctions would be relaxed. Tyler Richey, co-editor of the Seven Report Research, pointed out that if a ceasefire agreement is reached, the Trump administration may quickly lift restrictions on energy exports to Russia. Millions of barrels of Russian crude oil (especially in the Pacific region) currently stranded at sea due to sanctions will flow into the market, and the expectation of geopolitical stability "basically eliminates panic buying in the crude oil market." Manish Raj, director of Velandera Energy Partners, further analyzed that the peace agreement will not only release stranded crude oil, but may also prompt the US to pressure Russia to increase production, exacerbating the loose supply situation.
The Fed's policy moves have become another key factor suppressing oil prices. Although Trump called for a rate cut to stimulate investment, Fed Chairman Powell made it clear that he would not consider adjusting interest rates for the time being, emphasizing the need to be vigilant against the risk of repeated inflation. The US Consumer Price Index (CPI) soared 3.1% year-on-year in January, reinforcing the market's expectations of "long-term high interest rates." StoneX Energy Strategy Director Alex Hodes warned that if the tightening policy continues, it may trigger an economic recession and hit the demand for crude oil and refined oil.
Although the current oil price has partially reflected the expectation of geopolitical easing, if the US-Russia negotiations make substantial progress, coupled with the lag effect of the Fed's monetary policy, the crude oil market may face a deeper adjustment.