Oil prices experienced a downturn following President Trump's virtual address at the World Economic Forum. Highlighting his longstanding stance, Trump reiterated his call for OPEC to pump more oil, aiming to lower global oil prices. Meanwhile, European gas prices remain robust due to storage concerns, while the energy market grapples with shifting dynamics.
The Energy Information Administration (EIA) reported a 223 billion cubic feet (Bcf) draw in U.S. working storage, which fell short of the anticipated 248 Bcf. Despite this, U.S. crude inventories saw a decrease of 1.02 million barrels over the past week. The forward curve shows backwardation between summer 2025 and winter 2025/26, indicating market anticipation of higher future prices.
In the currency market, the British Pound extended its weekly uptrend, reaching a two-week high above 1.2400 against the U.S. Dollar on Friday. This upward trend was supported by better-than-expected preliminary January PMI data from the UK. Similarly, the EUR/USD pair gathered bullish momentum, trading near 1.0500.
President Trump's emphasis on lower oil prices during his speech contributed to the pressure on oil markets. His vocal stance on OPEC’s production levels echoes his previous term's policies and underscores ongoing tensions in global energy supplies. Saudi Arabia’s fiscal breakeven oil price is estimated to be just below US$91 per barrel, highlighting the complexities within the oil-producing region.
European gas prices have remained well-supported with TTF trading close to EUR50 per megawatt-hour (MWh), primarily driven by concerns over storage sufficiency. Talks of subsiding storage refills add another layer of complexity to the existing energy landscape.
The Federal Reserve has indicated that it requires solid evidence of economic weakness and subdued inflation to justify any further policy loosening. This cautious stance reflects broader economic uncertainties amid fluctuating commodity prices and currency valuations.