The energy sector concluded the trading week on a positive note as investors assessed evolving supply-side developments that could influence crude markets in the coming months. The Energy Select Sector SPDR Fund (XLE), a key benchmark for U.S. energy equities, rose 0.7% on Friday to close at $54.35. This move extends the fund's robust year-to-date performance, which now stands at approximately 21.6% since the end of 2025.
Market attention remains firmly fixed on potential changes to global oil supply. According to sources within the organization, the OPEC+ alliance is considering resuming incremental production increases starting in April. The group, which includes OPEC members and allied producers like Russia, has scheduled a critical meeting for March 1 to deliberate on output policy. The coalition had previously agreed to a collective quota increase of roughly 2.9 million barrels per day, scheduled to be phased in from April through December 2025, with output then held steady through the first quarter of 2026.
Concurrently, a significant geopolitical shift is unfolding. The United States has relaxed certain restrictions on Venezuela's energy sector, issuing two general licenses. This action permits companies including Chevron, BP, Eni, Shell, and Repsol to resume oil and gas operations and engage in discussions regarding new investment agreements with the state-owned Petróleos de Venezuela, S.A. (PDVSA), subject to obtaining separate authorizations. The U.S. Treasury Department noted that associated royalty and tax payments will be managed through a U.S.-administered Foreign Government Deposit Fund.
On the pricing front, crude oil edged higher to finish the week. The international benchmark Brent crude settled at $67.75 per barrel, while U.S. West Texas Intermediate (WTI) crude closed at $62.89. Analysts suggested that softer-than-expected U.S. inflation data provided some support for prices. "Inflation appears to be stabilizing," observed Dennis Kissler, Senior Vice President of Trading at BOK Financial. He added that a lower interest rate environment would benefit the broader economy but warned that a potential supply boost from OPEC+ poses a headwind for the oil market.
Domestic activity showed a slight contraction, with the weekly Baker Hughes report indicating the U.S. oil rig count declined by three to 409. Individual energy stocks displayed mixed performance. Chevron shares gained 0.7% to close at $183.74, and ConocoPhillips added 0.6%, finishing at $111.43. In contrast, Exxon Mobil declined 1.0% to $148.45, facing separate headwinds from a legal development. A federal judge rejected a motion by California's Attorney General to dismiss a defamation lawsuit filed by Exxon concerning public criticism of its advanced plastics recycling initiatives. The company stated the legal action was necessary to halt what it called "a campaign of lies."
Traders face a truncated data schedule due to the U.S. market holiday on Monday for Washington's Birthday. The next regular cash equity session will be on Tuesday. This break also delays the release of key inventory data. The U.S. Energy Information Administration has postponed its Weekly Petroleum Status Report, which is now scheduled for Thursday, February 19, with releases at 12:00 p.m. and 2:00 p.m. Eastern Time.
The confluence of these factors introduces notable uncertainty into the energy market calculus. The potential for increased supply from both OPEC+ and Venezuela arrives at a time when concerns about demand durability persist. Should additional barrels enter the market amid softening consumption, oil prices could face downward pressure. Historically, energy equities tend to amplify moves in the underlying commodity, meaning any correction could be pronounced following the sector's strong rally this year.
Market participants are now tasked with weighing the bullish implications of a supportive macroeconomic backdrop against the bearish risk of rising supply. The immediate trajectory for energy shares will likely hinge on the outcomes of the upcoming OPEC+ meeting and the subsequent market reaction to weekly inventory data later in the week. The sector's recent gains reflect optimism, but the evolving supply narrative underscores the persistent volatility and headline-driven nature of the oil and gas market.
