Crude oil futures experienced a volatile week, surrendering early gains to close below the critical $63 mark as market focus shifted from geopolitical risks to fundamental oversupply concerns. While the week began with a rally driven by residual Middle East tensions, a combination of bearish inventory data and a dovish outlook from the International Energy Agency (IEA) triggered a mid-week sell-off, leaving West Texas Intermediate (WTI) searching for a new floor.

The Surplus Shock

The primary driver of this week’s bearish turn was the release of the IEA’s February report, which painted a stark picture of the supply-demand balance for the remainder of 2026. The agency highlighted a looming “record surplus” of approximately 3.7 million barrels per day (mb/d), driven by robust non-OPEC+ production growth and sluggish demand. Simultaneously, the IEA revised its 2026 global demand growth forecast down to 850,000 bpd, citing economic headwinds. This data acted as a wet blanket on the rally seen earlier in the week, forcing traders to recalibrate their positions to reflect a market awash in crude.

Geopolitics and Inventory Builds

Compounding the downward pressure was a notable de-escalation in geopolitical risk premiums. Reports surfacing mid-week indicated that US-Iran negotiations could be prolonged, reducing the immediate threat of military action that might disrupt supply lines. Furthermore, the easing of US sanctions on Venezuela has paved the way for increased exports, with refiners like Valero reportedly securing shipments. Domestically, the bearish sentiment was reinforced by Energy Information Administration (EIA) data showing a substantial 8.5 million barrel build in US crude inventories, signaling that supply is outpacing consumption even in the world’s largest economy.

Technical Breakdown and Consolidation

Technically, the price action on the March 2026 contract (CL=F) was damaging. As seen in the 5-day chart, the asset failed to sustain the breakout above $65.50 on Wednesday (Feb 11), leading to a precipitous drop on Thursday. The market spent Friday consolidating in a tight range between $62.14 and $63.26, ultimately settling at $62.89. The inability to reclaim the $64 level suggests that the bears remain in control, with the $62.00 level now serving as the immediate line in the sand. The +0.08% intraday move on Friday was merely a stabilization rather than a conviction buy, leaving the weekly trend firmly in negative territory (-1.04%).

Looking ahead, the market enters the new week on fragile footing. Investors should monitor the $60.00 psychological support level; a breach below this could accelerate selling toward the 2025 lows. Conversely, any upside recovery will face stiff resistance at $64.50. Traders will be keenly watching for any shifts in OPEC+ rhetoric regarding the projected surplus, as well as the next round of US inventory data, to determine if the current sell-off has reached exhaustion or if further downside lies ahead.