U.S. energy equities closed higher on Friday, with the Energy Select Sector SPDR Fund (XLE) gaining 0.7% to settle at $54.35. However, crude oil benchmarks finished the week lower, setting up a tense period for the sector as key supply decisions loom.
OPEC+ Weighs Output Increase
The OPEC+ alliance, which includes major producers like Saudi Arabia and Russia, is reportedly leaning toward resuming oil production increases starting in April. A formal decision is expected when the group meets on March 1. This potential supply boost comes as Deputy Prime Minister Alexander Novak of Russia noted that demand typically begins to rise around March and April.
Venezuela Sanctions Eased
Adding another layer of supply uncertainty, the United States eased energy sanctions on Venezuela on Friday. The move grants licenses to several international oil companies, including Chevron (CVX), BP (BP), Shell (SHEL), Eni, and Repsol, to operate oil and gas projects in the country. A Chevron spokesperson described the action as "important steps toward enabling the further development of Venezuela’s resources."
Market Context and Data
The trading week is shortened by the Presidents Day holiday on Monday, when U.S. markets are closed. Recent economic data showed U.S. consumer prices rose 0.2% in January, with core CPI increasing 2.5% year-over-year, its smallest gain in nearly five years. Oil prices saw a modest rebound Friday, with Brent crude closing at $67.75 per barrel and West Texas Intermediate at $62.89, though both posted weekly declines.
Looking ahead, traders will monitor the U.S. Energy Information Administration's delayed Weekly Petroleum Status Report on Thursday, February 19. The broader market focus, however, remains fixed on the March 1 OPEC+ meeting, which will determine whether the group proceeds with planned output hikes that could pressure prices and energy stock valuations.
