Oil prices are on track for their first monthly decline since November, as economic uncertainty and weaker demand expectations weigh on the market. A stronger US dollar and concerns over slowing global growth have added to bearish sentiment, pushing crude lower despite ongoing supply risks.
Brent crude and West Texas Intermediate (WTI) have both lost ground in February, pressured by signs of softening demand in key markets, including China and Europe. While geopolitical tensions and OPEC+ supply cuts have provided some support, traders have remained cautious amid mixed economic data and shifting monetary policy expectations.
The recent strength of the US dollar has made oil more expensive for foreign buyers, dampening demand and accelerating the decline in prices. At the same time, signs of slowing industrial activity and weaker-than-expected economic indicators from China have raised concerns about the sustainability of demand growth in the world’s largest crude importer.
Federal Reserve officials have maintained a hawkish stance on interest rates, signaling that rates may stay elevated for longer to combat inflation. This has further weighed on risk assets, including commodities, as investors reassess the outlook for global growth and energy consumption. Higher borrowing costs could dampen economic activity and oil demand in the coming months.
Oil traders are also closely monitoring developments in the Middle East and Russia for potential supply disruptions. While geopolitical risks remain a factor, market sentiment has been more heavily influenced by macroeconomic concerns in recent weeks, leading to reduced speculative interest in crude futures.
Looking ahead, investors will be watching key economic reports and central bank statements for further clues on demand trends. If concerns over slowing global growth persist and the US dollar remains strong, oil prices may struggle to regain momentum, potentially extending the current downtrend.
