Alaska North Slope crude made a dramatic move upward to the high side of $75 Feb. 4, up $1.41 to close at $75.32 per barrel. West Texas intermediate fell 46 cents to close at $72.70 and Brent rose 24 cents to close at $76.20.
On Feb. 5, prices reversed and ANS dropped $1.36 to close at $73.96, WTI plunged $1.67 to close at $71.03 and Brent plunged $1.59 to close at $74.61.
The herky-jerky price action is illustrative of a market on its toes, roiled by potential trade wars and poised to respond to a cascade of factors which might propel crude markets into new orbits at any time.
Data from the U.S. Energy Information Administration hit the market Feb. 5 with a bearish indicator -- a jumbo surprise surge in commercial crude inventories.
Crude stocks for the week ended Jan. 31 -- excluding the Strategic Petroleum Reserve -- leapt 8.7 million barrels from the previous week to 423.8 million barrels, 5% below the five-year average for the time of year, the EIA said.
An analyst survey by The Wall Street Journal had predicted crude levels would move up by 1.3 million barrels.
Total motor gasoline inventories increased by 2.2 million barrels for the period to 251.1 million barrels, slightly above the five-year average for the time of year, the EIA said. Distillate fuel inventories decreased by 5.5 million barrels to 118.5 million barrels -- 12% below the five-year average for the time of year.
Gasoline stocks had been forecast to be up by 100,000 barrels.
Iran crackdown briefly lifts markets
Traders had been cheered Feb. 4 by an executive order from U.S. President Donald Trump to put "maximum economic pressure" on Iran, rescuing futures prices from steep losses earlier in the day after additional U.S. tariffs of 10% against China imports went onto force.
Brent had been down more than 2% early Feb. 4 but ended the day in the black.
The National Security Presidential Memorandum was designed to deny Iran "all paths to a nuclear weapon, and countering Iran's malign influence abroad," the White House said in a release.
The NSPM directs the Secretary of the Treasury to sanction or impose enforcement mechanisms on those acting in violation of existing sanctions.
But traders returned to gloom over Chinese demand on Feb. 5.
"The wild price swings earlier this week have exposed the oil market's sensitivity to trade-related headlines," Han Tan, chief market analyst at Exinity told MarketWatch.
Although the 10% U.S. tariff has already "prompted tit-for-tat responses from China, markets are all too aware that trade tensions between the world's two largest economies have room to escalate further," Tan said. "A significant escalation and broadening of a trade war is set to darken the global economic outlook and could lead to oil demand destruction, potentially offsetting further sanctions on Iranian supplies."
ANS fell 96 cents Feb. 3 to close at $73.91, while WTI gained 63 cents to close at $73.16 and Brent fell 80 cents to close at $75.96.
The Organization of the Petroleum Exporting Countries and its allies held the first meeting of the year Feb. 3 resulting in agreement to keep production policy unchanged.
OPEC+ plans to gradually add some 2.2 million barrels per day of supply over 18 months beginning in April, depending on market conditions. It will meet again on Apr. 5.
On Jan. 31, ANS added 29 cents to close at $74.87, WTI shed 20 cents to close at $72.53 and Brent shed 11 cents to close at $76.76.
ANS gained 21 cents Jan. 30 to close at $74.58, as WTI added 11 cents to close at $72.73 and Brent gained 29 cents to close at $76.87.
From Wednesday to Wednesday, ANS lost 41 cents from its close of $74.37 Jan. 29 to $73.96 Feb. 5.
ANS traded at a $2.93 premium over WTI Feb. 5, while trading at a 65-cent discount to Brent.
Energy pulled into trade war
The energy industry is being pulled into the vortex of America's trade wars, and it could drag on the stocks of oil and gas producers, Avi Salzman said in a Feb. 4 Barron's feature.
U.S. energy is a much bigger industry than it was in President Trump's first term -- more intertwined than ever with global trade, Salzman said.
"At the very least, these stocks are vulnerable to constant will-he-or-won't-he headlines about tariffs; at worst, their entire supply chains could be at risk," he said. "It may be one reason why energy stocks have fallen since Trump's election, even as he has promoted fossil fuels, and the overall market has risen."
"If the tariffs disappear quickly, the oil market may emerge unscathed," Salzman said. "But the industry is now too big to ignore, and it's unlikely to avoid the impact if levies linger."
