Markets are starting February with a more cautious tone across key assets, as shifting macro forces ripple through commodities, equities, and currencies. Oil prices have softened as supply concerns and a stronger US dollar weigh on sentiment, energy stocks like Exxon Mobil are showing resilience through strong cash flow despite weaker crude prices, and the EUR/USD pair is pulling back after a strong January rally as the dollar regains ground. Together, these moves highlight a market environment where fundamentals and policy expectations are back in focus, and investors are becoming more selective as volatility picks up.
Markets are starting February with a more cautious tone across key assets, as shifting macro forces ripple through commodities, equities, and currencies. Oil prices have softened as supply concerns and a stronger US dollar weigh on sentiment, energy stocks like Exxon Mobil are showing resilience through strong cash flow despite weaker crude prices, and the EUR/USD pair is pulling back after a strong January rally as the dollar regains ground. Together, these moves highlight a market environment where fundamentals and policy expectations are back in focus, and investors are becoming more selective as volatility picks up.
Oil Loses Its Edge as Supply Concerns Take Center Stage
As of February 3, 2026, WTI crude oil is trading around $61–62 per barrel, slipping from its early January highs near $65–66 but still holding a small gain for the year so far. Over the past week, prices have been choppy and moved lower by about 4–5%, mainly because fears around geopolitical tensions have eased, removing some of the risk premium that had been supporting oil. At the same time, a stronger US dollar has added pressure, as it makes oil more expensive for buyers outside the United States. Overall, market sentiment has shifted away from fear-driven buying and back toward basic supply-and-demand factors, with growing concerns that global oil supply may be more than enough to meet demand weighing on prices.
Oil Pulled Between Geopolitical Risk and Oversupply Pressure
Right now, oil prices are being pulled in two opposite directions by supply and demand factors. On the supportive side, periodic geopolitical tensions in the Middle East can still push prices higher, as markets tend to add a "risk premium" when there are fears of supply disruptions. In addition, analysts point out that tighter sanctions on Russia and unexpected production outages in some regions help keep prices from falling too sharply. However, the downside pressures are stronger overall. Forecasts from the US Energy Information Administration suggest that global oil production will exceed demand in 2026, which could lead to rising inventories and lower prices. Several outlooks also warn of a structural oversupply, potentially around 3 million barrels per day more than the market needs, unless something major disrupts supply. On top of that, OPEC+ has largely kept output steady rather than cutting production to support prices. In the short term, weekly US inventory data remains important, as rising stockpiles usually signal weaker demand and weigh on prices, while surprise drawdowns can briefly offer support.
Caught in the Crosswinds of the Global Economy
Beyond supply and demand, broader economic and policy factors are also shaping oil prices. A stronger US dollar is one key influence, as oil is priced in dollars and becomes more expensive for buyers using other currencies, which can reduce global demand. At the same time, uncertainty around US monetary policy and future interest rate decisions adds volatility to markets, with higher rates generally weighing on commodities like oil. Slower global economic growth is another headwind, as weaker activity means less fuel consumption and reinforces concerns about oversupply. Trade and strategic decisions, such as evolving agreements that affect how Russian and US crude flows into global markets, can also shift dynamics over time, though their impact is still unfolding. Above all, geopolitics remains the biggest wildcard, especially in the Persian Gulf, where any renewed escalation could quickly push prices higher by bringing back a risk premium.
Exxon Mobil: Strong Cash Flow Anchors Performance Amid Weaker Oil Prices
Exxon Mobil is one of the world's largest energy companies. It produces oil and natural gas, refines fuel, and makes chemical products used in everyday items. The company was founded in 1870 and is based in Irving, Texas, with operations around the world.
Exxon's main strength is its ability to produce energy at low cost, especially from major projects in Guyana and the US Permian Basin. This helps the company generate steady cash, pay reliable dividends, and invest for the long term even when oil prices move up and down.
Exxon Delivers Solid Q4 Results as Strong Execution Offsets Weaker Oil Prices
Exxon Mobil Corporation reported a solid performance for the fourth quarter of 2025, showing strong operations and good cost control despite weaker oil and gas prices. For the quarter ended December 31, the company earned $6.5 billion in net income, with $1.53 per share on a GAAP basis and $1.71 per share on an adjusted basis, slightly above Wall Street expectations. Revenue was about $82.3 billion, a bit better than analysts had forecast.
Exxon's earnings were lower than the prior year mainly because oil and gas prices were weaker, but the company made up for some of that by increasing production and cutting costs. It generated strong cash — with operating cash flow of about $12.7 billion — which helps fund dividends, stock buybacks, and other shareholder returns while keeping the balance sheet healthy.
As of February 2, 2026, Exxon Mobil's stock was trading around $138.4 per share, reflecting both the earnings beat and investor caution about the near-term commodity outlook.
Low-Cost Growth and Strong Cash Flow Support Exxon's Resilience
Exxon Mobil's strengths in Q4 2025 were driven by low-cost production growth, particularly in Guyana and the Permian Basin, which helped the company remain profitable despite weaker oil prices. Strong cash generation was another key support, with operating cash flow of about $12.7 billion and free cash flow of about $5.6 billion, funding dividends, share buybacks, and ongoing investments without stressing the balance sheet. Management's disciplined capital spending and cost control kept breakeven levels low, improving resilience across commodity cycles. In addition, Exxon's large scale and integrated business model helped smooth earnings, reducing overall volatility.
Commodity Price Headwinds and Transition Risks Temper the Outlook
Exxon Mobil continues to face several challenges despite its solid execution. Earnings remain highly sensitive to oil and gas prices, and lower crude and natural gas realizations weighed on year-over-year results in Q4, making commodity prices the biggest swing factor for profits. Downstream and chemical businesses also faced pressure, as weaker refining margins and soft demand limited contributions from these segments. The stock's muted reaction after the earnings beat suggests investors remain cautious about the near-term energy outlook without higher oil prices. Over the longer term, regulatory pressure and the global shift toward lower-carbon energy add structural risks for traditional oil producers.
EUR/USD Pauses After January Surge as Dollar Regains the Upper Hand
The EUR/USD pair is trading around 1.18 in early trading on February 3, easing back from last week's multi-year highs above 1.20 reached in late January. Currency markets have remained volatile, with the US dollar regaining some strength after stronger-than-expected manufacturing data and growing expectations that the incoming Federal Reserve chair may be less aggressive with interest-rate cuts. Following a strong January rally, EUR/USD has corrected lower as continued resilience in US economic data underpins the dollar, while traders trim positions and adopt a more cautious stance ahead of key upcoming releases, including US jobs data and Eurozone inflation figures.
Policy Divergence and Data Keep EUR/USD on Edge
On the US side, the dollar continues to draw support from relatively strong economic data, reinforcing its recent gains. Market expectations have also been shaped by the nomination of the next Federal Reserve chair, Kevin Warsh, with traders increasingly pricing in a less aggressive pace of future interest-rate cuts. In the Eurozone, economic data has been more encouraging than expected, with fourth-quarter GDP growth surprising to the upside and highlighting underlying resilience. However, European Central Bank officials have voiced concerns about the euro's strength, noting that a stronger currency could slow inflation and complicate policy decisions. Inflation remains a key factor, with recent figures suggesting price pressures are close to the ECB's target, giving policymakers room to keep rates unchanged for now. Overall, the fundamental backdrop reflects ongoing policy divergence and mixed economic signals, leaving markets highly sensitive to fresh guidance on growth and interest rates on both sides of the pair.
Cautious Traders Lean Back Toward the Dollar
Market sentiment has recently shifted in favor of the US dollar following strong US economic data and renewed focus on the Federal Reserve's policy outlook. As a result, EUR/USD has given back most of its January gains, a move that reflects profit-taking and a return of short-term bearish pressure on the pair. Positioning indicators suggest traders are alert but cautious, with rising open interest showing increased engagement while markets wait for clear direction from upcoming events such as US jobs data and key ECB meetings. Overall, sentiment is neutral to slightly bearish for the euro in the near term, with short-term traders leaning toward further dollar strength, even as longer-term expectations still allow room for a potential rebound.