Brent crude fell by over 4% from the end of last month to start February at around $82.84/bbl before hitting its lowest point on February 3rd at $79.94/bbl, as fears of an economic downturn were fueled by further interest rate hikes from the major central banks in early February. Brent crude then peaked at $86.61/bbl on February 13th before slowly declining to end the month at $83.16/bbl as an increase in Chinese demand grappled with the threat to supply from the upcoming Russian output cuts in March.

GBP started February at its strongest point of the month, trading at $1.238 against USD, as investors welcomed further interest rate hikes from the Bank of England in its ongoing battle to lower record-high levels of inflation. However, GBP then proceeded to decline throughout the rest of February, ending the month at $1.194 against USD, its lowest level since January 5th as the UK saw its inflation level drop to 10.1% in January, leaving investors concerned that the Bank of England may potentially start to ease any further monetary tightening policy.

Chinese-Russian relations have strengthened during February, with China monopolising the heavily discounted crude exports from Russia to meet growing demand levels. Top Chinese diplomat Wang Yi also met with Putin just days ahead of the one-year anniversary of the war in Ukraine to “solidify” relations between China and Russia following President Putin’s state of the nation address. The spike in demand levels seen from China has also prompted both OPEC and the IEA to increase demand forecasts for 2023 by as much as 500,000bpd, despite a number of concerning global supply factors such as the upcoming Russian output cut & the closure of Shell’s 400,000bpd Pernis refinery for 3 months of maintenance.