Oil Prices Hold Steady as Global Talks Continue

Oil markets opened the week with modest price movement, even as geopolitical and economic developments continued to unfold in the background. Prompt WTI futures rose by about 60 cents to around $63.58 per barrel, while Brent futures edged slightly lower to approximately $68.55 per barrel following the President's Day holiday in the United States.

At the center of market attention are ongoing nuclear negotiations between the United States and Iran, which are taking place in Geneva and coincide with heightened military activity in the Middle East. Iran announced that parts of the Strait of Hormuz would close for several hours as part of military drills, describing the move as a security precaution to ensure shipping safety. This development comes as Iranian officials indicated they are prepared to extend talks to finalize an agreement, while the United States has maintained a military presence in the region. Since the Strait of Hormuz remains one of the world's most critical oil export routes, any operational disruption or military activity there continues to draw close attention from global energy markets.

At the same time, geopolitical tensions in Eastern Europe are also contributing to market uncertainty, as Russia and Ukraine exchanged attacks on energy infrastructure over the weekend. Reports indicated that strikes hit seaports, fuel tanks, and oil storage facilities, while Ukrainian forces also targeted the Ilsky refinery and a port in Taman. These events come just ahead of trilateral talks involving the United States, Russia, and Ukraine, which could address the ongoing conflict and its impact on energy flows. In parallel, the United Kingdom and European allies met to discuss potential measures against oil tankers linked to Russia's shadow fleet, signaling continued focus on oil transportation and enforcement efforts.

Russia's key Baltic Sea commodity ports are currently facing their most extensive sea ice conditions in 15 years. As a result, export activity could be limited due to a shortage of vessels capable of operating in those conditions, further highlighting how operational challenges can also influence crude flows.

While geopolitical developments remain the dominant focus, broader economic indicators in the United States are also shaping market expectations. January core CPI rose 0.30% month over month, in line with expectations, while the annual rate declined to 2.50%. Core goods excluding used cars recorded their fastest increase since early 2023, while services excluding rent and airfares rose at a slower pace than their recent average. At the same time, Goldman Sachs Research estimates that the core PCE price index increased by 0.40% in January, reflecting continued monitoring of inflation trends.

Labor market data is also being closely watched, as the January employment report showed early signs of stabilization. Analysts noted that job losses linked to artificial intelligence remain visible but moderate, while hiring restraints at companies evaluating AI adoption continue to present a manageable headwind. Although stabilization remains preliminary and risks to the labor outlook persist, these changes provide additional context for broader economic conditions affecting the energy sector.

In parallel, financial participants have continued adjusting their positions in crude markets. Managed money participants increased their net length in crude oil by 8,600 lots, with gains recorded in both WTI and Brent contracts. Meanwhile, gasoline net length increased, while heating oil net length declined, reflecting ongoing adjustments across refined product markets as traders respond to evolving conditions.

Drilling activity in North America has also shifted slightly, reflecting changes in upstream operations. The U.S. crude oil rig count declined by three rigs to 409 for the week ending February 13, with decreases concentrated in the Permian Basin and other producing regions. Compared to last year, the U.S. oil rig count remains significantly lower. Similarly, Canada's crude oil rig count fell by two rigs to 153, with declines in several Alberta and Saskatchewan basins partially offset by increases elsewhere. Although Canadian rig counts are slightly higher than last month, they also remain below year-ago levels.