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What’s happening: Crude oil prices rose on Wednesday, even as the EIA predicted record production in the US this year.
What happened: Global macroeconomic uncertainty and geopolitical tensions have hit crude prices so far in 2025.
Sentiment for crude oil was supported on Wednesday by a lower-than-expected increase in US crude stockpiles.
Why it matters: Crude oil prices have been on a downturn since the beginning of 2025, with President Donald Trump’s tariff policies sparking fears of a recession in the US and economic turmoil in the targeted nations.
Investors have been treading cautiously, with Canada and China not losing any time to announce retaliatory tariffs.
Meanwhile, speculations of sanctions on Russian oil being lifted added to the volatility in crude oil prices. While Ukraine has agreed to a US proposal of an immediate one-month ceasefire, Russia is expected to demand the lifting of some sanctions to accept the ceasefire plan.
The EIA (Energy Information Administration) raised its projection for US crude production in 2025 to a record high of 13.61 million barrels per day. The agency also announced that US crude oil inventories had risen by 1.448 million barrels in the week ended March 7. However, the figure came in below market expectations of 2 million, lending support to crude oil prices.
The EIA report also showed that crude stockpiles at the Cushing, Oklahoma hub contracted by 1.228 million barrels in the week.
WTI crude oil for April delivery rose by $2.16% to $67.68 on Wednesday. WTI prices are down almost 5% over the past month and about 6% year to date. Brent for May settlement closed 2% higher at $70.95 a barrel.
What to watch: Investors will continue monitoring the Trump administration’s announcements related to tariffs, which has fuelled heightened macroeconomic uncertainty.
The OPEC+ decision to boost output in April will also remain in focus.
Context: The US dollar index climbed on Wednesday after having shed more than 4.5% since the beginning of this year.
Details: The US dollar started the week on a negative note amid concerns over President Donald Trump’s tariff policies leading to inflation and an economic slowdown.
Inflation data released on Wednesday provided relief to markets and supported sentiment for the US economy. The data showed the annual inflation rate in the US easing to 2.8% in February, from 3% in the previous month. The figure also came in below market expectations of 2.9%.
The annual core consumer price inflation rate, which excludes food and energy, eased to 3.1% in February, from January’s 3.3%, and was lower than estimates of 3.2%.
Meanwhile, the BRICS nations, which now comprises of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the UAE, have been discussing an alternative to the US dollar. However, India’s foreign minister Subrahmanyam Jaishankar said during his visit to London that his country has “absolutely no interest” in undermining the US dollar.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose 0.16% to 103.58 on Wednesday. The DXY has lost around 4% over the past month.
What to watch: Investors await the release of producer price inflation and initial jobless claims data from the US today (1630 UAE Time). The US PPI, which remained unchanged at 3.5% year-on-year in January and came in above market expectations of 3.2%, is expected to ease to 3.3% in February.
US initial jobless claims had declined by 21,000 from the previous week to 221,000 in the last week of February, coming in significantly better than market expectations of 235,000. Analysts expect the figure to rise to 225,000 in the first week of March.
Other Markets: US stock indices closed mixed on Wednesday, with the Dow Jones index down by 0.20% and the S&P 500 and Nasdaq up by 0.49% and 1.22%, respectively.
US President Donald Trump said negotiators were on their way to Russia for talks on the ceasefire deal with Ukraine. The news sent the RUB/USD pair slightly higher in forex trading this morning.
Australia building permits grew by 6.3% to 16,579 units in January, accelerating from 1.7% growth in the previous month. The figure reaching a 25-month peak lent support to the AUD/USD forex pair.
UK’s residential home price balance fell to 11% in February, from 21% in December, and came in below market estimates of 20%. This being the second consecutive month of decline sent the GBP/USD pair lower in forex trading this morning.
Japan’s stock investments by foreigners fell by ¥220.50 billion in the week ending March 8. However, the decline being much lower than the previous week’s ¥708.3 billion lent support to the JPY/USD forex pair.
New Zealand’s tourist arrivals rose by 13.4% year-on-year to 370,238 in January, accelerating from the previous month’s 12.2%. Despite this, the NZD/USD pair fell in forex trading this morning.
Hong Kong’s industrial production (1230 UAE Time), France’s IEA oil market report (1300 UAE Time), South Africa’s gold production (1330 UAE Time), Eurozone’s industrial production (1400 UAE Time), Ireland’s inflation rate (1500 UAE Time), Israel’s balance of trade and current account (1500 UAE Time), Brazil’s banking lending (1530 UAE Time), Portugal’s economic activity and private consumption (1530 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Mexico’s industrial production (1600 UAE Time), Canada’s building permits (1630 UAE Time), and the EIA’s natural gas stockpiles (1830 UAE Time).
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