MW Oil prices settle lower as IEA warns that trade tensions will undercut demand

By Myra P. Saefong and William Watts

WTI and Brent crude trade lower week to date

Oil futures declined on Thursday to trade lower for the week after the International Energy Agency's monthly report underscored worries that rising global trade tensions could undercut energy demand.

Price moves

-- West Texas Intermediate crude CL00 for April delivery CL.1 CLJ25 fell $1.13, or 1.7%, to settle at $66.55 a barrel on the New York Mercantile Exchange, after climbing 2.2% Wednesday.

-- May Brent crude BRN00 BRNK25, the global benchmark, lost $1.07, or 1.5%, at $69.88 a barrel on ICE Futures Europe.

-- April gasoline RBJ25 edged down by 0.8% to $2.13 a gallon, while April heating oil HOJ25 fell 2% to $2.16 a gallon.

-- Natural gas for April delivery NGJ25 settled at $4.11 per million British thermal units, up 0.7% after tapping an intraday low of $3.955.

Market drivers

Renewed trade tensions between the U.S. and the European Union raised concerns over a potential economic slowdown, which could "dampen long-term oil consumption," Maria Agustina Patti, financial markets strategist consultant to Exness, said in emailed commentary. "Uncertainty surrounding global trade policies introduced caution into the market, limiting further price gains."

In a monthly report, the Paris-based IEA warned that the "macroeconomic conditions that underpin our oil demand projections deteriorated over the past month as trade tensions escalated between the United States and several other countries. New U.S. tariffs, combined with escalating retaliatory measures, tilted macro risks to the downside."

The IEA said oil demand has underwhelmed, and the agency cut its estimates for growth in the fourth quarter of last year and the current quarter slightly to around 1.2 million barrels a day to reflect data for both advanced and developing markets that came in below projections. The agency still expects demand to grow by just over 1 million barrels a day this year, up from 830,000 barrels a day in 2024, helped in part by lower oil prices.

However, Stephen Innes, managing partner at SPI Asset Management, told MarketWatch that "scattered calls for a U.S. recession in [the first quarter] are looking overblown."

"There's been little evidence that soft survey data is bleeding into 'hard' data in any meaningful way," he said. He believes "what's happening is a controlled reset of government employment and spending to temper inflation to force the [Federal Reserve's] hand, and the latest CPI data suggests it's starting to work - though the data hasn't yet captured the full impact of tariffs." The consumer-price index increased by 0.2% last month, breaking a string of elevated inflation readings since November.

"The case for Fed easing is building - and despite all the supply and demand headwinds across commodities, this could be the single biggest stabilizing force for markets right now," Innes said. "If the Fed gives a clear signal that rate cuts are coming, expect that to put a floor under risk assets," even with trade tensions simmering.

Still, so far this month, crude prices have fallen sharply, with WTI and Brent seeing their lowest settlements in six months on Monday.

Sub-$65 a barrel WTI prices would raise the risk that the Organization of the Petroleum Exporting Countries scraps its plans to roll back voluntary oil production cuts, Innes said. "If we see a deep discount move below that level, the cartel could easily justify staying on the sidelines longer than expected, throwing another wrench into global supply dynamics."

Oil prices found some support Wednesday, ending that session higher after the U.S. Energy Information Administration reported a larger-than-expected drop of 5.7 million barrels in gasoline inventories for the week ending March 7. It also showed demand for gasoline climbed, with total finished motor gasoline supplied, a proxy for demand, at 9.182 million barrels per day in the latest week, versus 8.877 million bpd from a week earlier.

Natural-gas futures, meanwhile, shook off their early decline Thursday to finish higher as U.S. supplies fell by more than expected last week.

The EIA reported Thursday that U.S. supplies of the fuel declined by 62 billion cubic feet for the week ending March 7. On average, analysts had forecast a fall of 44 bcf, according to a survey by Platts, part of S&P Global Commodity Insights.

-Myra P. Saefong -William Watts

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March 13, 2025 15:07 ET (19:07 GMT)

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