Latest News

Crude Oil Lower; Ukraine Situation Remains Key


© Reuters

By Peter Nurse — Oil prices weakened Monday, falling from seven-year highs, after Ukraine hinted at concessions that could reduce the likelihood of Russia invading its neighbor. 

By 9:05 AM ET (1405 GMT), U.S. crude futures traded 0.6% lower at $92.58 a barrel, falling back after hitting its highest since September 2014, while the Brent contract fell 0.7% to $93.82, after earlier peaking at its highest since October 2014.

U.S. Gasoline RBOB Futures were down 1.2% at $2.7048 a gallon.

The BBC initially reported earlier Friday Ukrainian Ambassador Vadym Prystaiko saying Ukraine might be “flexible” over its aim to join NATO, which would significantly help address Russia’s concerns.

However, he later said he had been misunderstood on his views on the western military alliance, but Ukraine was prepared to make other concessions.

The attempt by Ukraine to ease tensions has resulted in some selling in the crude market, after prices had soared to seven-year highs on concerns that a Russian invasion was imminent.

White House National Security Advisor Jake Sullivan said in an interview with CNN on Sunday that a Russian invasion of Ukraine could begin any day. The U.S. and several other western countries have advised their nationals to leave Ukraine.

The finance ministers of the G7 group of large economies warned Russia Monday of “massive” economic consequences if it chose to invade Ukraine. 

Such consequences could potentially shut Russian banks out of the SWIFT financial messaging system, the channel through which almost all international buyers execute their payments for Russian energy exports.

A lack of access to SWIFT would force international buyers to chase alternative energy supplies in the short term, forcing prices higher given the lack of spare capacity in the market.

This comes while demand continues to recover from the Covid-19 pandemic. The International Energy Agency lifted its 2022 demand forecast by 800,000 barrels a day last week, seeing global demand growing by 3.2 million barrels a day this year.

The market will need a boost in supply in order for prices to not move toward the $100 a barrel level. 

The latest data from Baker Hughes, released Friday, showed that the number of active oil rigs in the U.S. increased by 19 over the last week to 516 – the largest weekly increase since 2018 and the first time that the rig count has surpassed 500 since April 2020. 

“The high price environment that we are currently in could very well test whether U.S. producers will stick to the capital discipline that we have seen from them over the last couple of years,” said analysts at ING, in a note. “Strong U.S. supply growth this year will be crucial to our view that the oil market will move back into surplus later in the year.”

Elsewhere, talks to salvage Iran’s 2015 nuclear deal are not at a dead end but key outstanding issues require political decisions by the West, Iran’s foreign ministry spokesman said on Monday.

A deal could lift U.S. sanctions on Iranian oil, leading to the potential return of more than one million barrels per day, more than 1% of global supply, to the global market.

Crude Oil Lower; Ukraine Situation Remains Key

Disclaimer:Fusion Mediawould like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Splunk Stock Surges on Report of $20 Billion Cisco Buyout Offer

Previous article

‘We live 5 minutes from our in-laws who have a larger home’: I want to swap houses. Would that come with any tax implications?

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News