Brent Continues to Hover in a Wide Trading Range

Brent crude prices are down 1.3% this week, trading at $74.30 per barrel and marking new 2025 lows. Prices initially rose on Monday and Tuesday following reports of lower Russian oil production and fears of effective sanctions against its energy sector. However, U.S. President Donald Trump once again surprised the markets by pushing Russia-Ukraine peace talks into the public spotlight.

Russia reported oil production below its OPEC+ quota, falling by 16,000 barrels per day to 8.962 million bpd. Traders rushed to buy crude amid concerns that U.S. sanctions on Gazpromneft, Surgutneftegaz, Russian oil service firms, and its "dark fleet" of aging tankers were significantly disrupting Russian exports. This drove Brent prices up by 3.2% to $77.74 per barrel.

Market sentiment then reversed sharply as the American Petroleum Institute (API) reported a much larger-than-expected rise in U.S. crude inventories, up 9.04 million barrels versus the 2.80 million consensus. The Energy Information Administration (EIA) followed with a similarly bearish report, showing a 4.07 million-barrel build versus the expected 2.40 million.

Adding to the turbulence, January inflation data in the U.S. came in unexpectedly high. Federal Reserve Chair Jerome Powell responded with hawkish remarks, signaling no immediate need for rate cuts. This strengthened the dollar and further pressured oil prices.

The most significant shift came when Trump made direct calls to Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky to facilitate peace talks. This suggests negotiations may be reaching an advanced stage, possibly including a ceasefire. If successful, the U.S. may consider lifting some sanctions on Russian oil, further weighing on prices. Brent fell 2.5% to $75.38 per barrel on Wednesday and continued its decline into Thursday.

Fundamentally, the outlook favors further downside. Technically, Brent could fall to key support at $68.00–70.00 per barrel. However, a consolidation within the $75.00–78.00 range is also possible.

The United States Oil Fund (USO) saw net inflows of $114.3 million last week, roughly offsetting the prior week’s outflows. This suggests large investors are not yet committed to a clear direction. With Brent trading near the middle of its five-month range of $70–80 per barrel, both upside and downside scenarios remain equally plausible heading into spring. U.S. producer prices and retail sales data for January are unlikely to provide a decisive push in either direction this week, keeping investors in wait-and-see mode.