WTI ebbs back to the $92.00 area from APac highs, geopolitics remains the key driver
|- WTI has eased back to near $92.00 from Asia Pacific session highs above $95.00 since the start of European trade.
- In the absence of US/EU/UK sanctions that directly hit Russian energy exports, the case for WTI near $100 is weakened.
- Expectations for a US/Iran nuclear deal and coordinated global oil reserve release has further dampened the price action.
Front-month WTI futures are back to trading in the $92.00 area once again, having ebbed back from Asia Pacific session highs in the $95.00s. Russia renewed its assualt on Ukraine’s capital city of Kyiv during Friday’s Asia Pacific session, which seemed to support oil prices at the time, though the bulls had lost the upper hand by the time European markets opened. Prices are currently probing Thursday’s lows in the mid-$91.00s, a break below which would open the door to a test of earlier weekly lows sub-$91.00.
As the fighting in Ukraine intensifies, a significant degree of risk premia is likely to remain embedded in crude oil prices. However, in the absence of sanctions from the likes of the US, EU and UK that directly target/restrict Russian energy exports, the case for WTI to remain at or near $100 per barrel does not seem to be there. That is escpecially true in the context of other recent key developments, including a further coordinated global release of crude oil reserves (again headed by the US) and US/Iran progress towards a deal on nuclear.
This has helped ease concerns about near-term crude oil market tightness. But Western powers have said all options regarding sanctions on Russia remain on the table, including on its energy sector. It will be key to continue to watch how the Russia/Ukraine war unfolds and whether EU/US leaders succumb to pressure to do more to deter Russian aggression. For now, a sustained break below $90.00 seems unlikely.
Elsewhere, oil prices did not respond to reports that OPEC+ is likely to stick to its existing policy of increasing output quotas at a measured pace of 400K barrels per day each month at its upcoming meeting on March 2. The group's decision would come despite the recent surge in prices following Russia's invasion of Ukraine.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.