The black liquid is bullish at the start of the London session today as it recoups losses seen on Wednesday which saw both benchmarks slip more than 3% in the previous session, as investors gauged the impact of easing Russia-Ukraine tension against a taut balance of tight global supplies and recovering fuel demand.
The global benchmark, the Brent crude oil futures is up 1.30%, currently trading $94.48 a barrel after losing 3.3% overnight after Russia announced a partial pullback of its troops near Ukraine. Although this is yet to be verified by the United States. The United States’ benchmark, the West Texas Intermediate (WTI) crude is also up 1.16%, currently trading $93.16 a barrel, after losing 3.6% in the previous trading session.
Both benchmarks had hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82. The price of Brent gained over 50% in 2021, while WTI soared about 60%, as a global recovery in demand from the COVID-19 pandemic strained supply.
What you should know
- Russia announced yesterday the partial pullback of its troops from Ukraine’s borders. However, this was met with skepticism, as U.S. President Joe Biden warned that more than 150,000 Russian troops were still massed near the borders.
- Although this caused a pullback in the price of oil, the oil market remains tight and prices are still on course for a move towards $100 a barrel.
- Jonathan Barratt, chief investment officer at Probis Group explained that, “Technically we could see prices heading back to $90 a barrel on profit-taking, but they will trend higher towards $100 as the economy is getting back on track and more demand is coming through in a tight market.”
- While we are seeing a de-escalation of the Ukraine crisis, the U.S. Labor Department reported producer prices increased by the most in eight months in January, a reminder that high inflation could persist through much of this year.
All eyes are now on the weekly U.S. oil inventories data from the Energy Information Administration (EIA) due later today. A Reuters poll suggested that U.S. crude and distillates inventories may have fallen by 1.5 million to 1.6 million barrels last week.
Also to note, data from the American Petroleum Institute (API) showed a drop in crude, gasoline and distillate stocks last week, according to market sources on Tuesday.
