- WTI backs off from the highs but the bias is bullish.
- The deepening crisis in Ukraine raises the prospect of heavier sanctions.
Oil prices were climbing at the start of the week but have since moved lower and at $103.72, the black gold is down by some 0.52%. However, concerns growing about tighter global supply would be expected to keep the price elevated.
The deepening crisis in Ukraine raises the prospect of heavier sanctions by the West on top exporter Russia. Reuters reported that the Ukrainian Foreign Minister Dmytro Kuleba said there had not been any recent diplomatic communications between Russia and Ukraine at the level of their foreign ministries and that the situation in the port of Mariupol, which he described as "dire", may be a "red line" in the path of negotiations.
Additionally, EU governments said last week the bloc's executive was drafting proposals to ban Russian crude, but diplomats said Germany was not actively supporting an immediate embargo.
Those comments came before tensions grew in the Ukraine crisis over the weekend, with Ukrainian soldiers resisting a Russian ultimatum to lay down arms on Sunday in the pulverised port of Mariupol. Moscow, which calls its actions in Ukraine a "special operation", said its forces had almost completely seized the city, providing no signs of a ceasefire.
''Crude oil prices have remained resilient against the broadening deterioration in Chinese mobility and easing of supply risks, with the consolidation in Dec23 Brent crude prices remaining consistent with noise as markets retained risk premia associated with structural supply woes,'' analysts at TD Securities said.
''We may look to re-engage topside, as our tracking of Chinese traffic conditions within the 15 largest cities by vehicle registrations suggests that transportation demand in China is once again on the rise. This fits with signs of stabilization from our real-time demand indicator earlier this week, while Shanghai also begins to ease mobility restrictions.''
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