The futures have settled below $130 a barrel, struggling to get back to the recent tops so far
Crude oil prices rallied to fresh multi-year highs on Tuesday in a knee-jerk reaction to Biden’s official decision to ban imports of energy products from Russia including oil in response to its military operation in Ukraine. Earlier, the United Kingdom announced its own restrictions on buying Russian oil imports. The UK said it would phase out imports by the end of 2022.
Brent crude jumped to $133 a barrel before retreating marginally. Still, traders refrain from a more aggressive profit-taking despite the elevated levels, with Brent crude clinging to the upper end of the extended trading range. On Wednesday, the futures have settled below $130 a barrel, struggling to get back to the mentioned tops so far.
In the near term, oil prices could see some profit-taking, but the overall trend will stay bullish as long as geopolitical tensions surrounding Ukraine persist. Of note, Saudi Arabia has reaffirmed its commitment to the OPEC+ agreement with Russia. At the same time, the Kingdom has not made a move to bring extra crude onto the market despite the elevated prices.
Elsewhere, the API reported overnight that US crude stockpiles unexpectedly increased by 2.8 million barrels while economists were expecting a draw of about 833,000 barrels. Meanwhile, gasoline inventories fell by 2.0 million barrels, and distillate stocks increased by 5.5 million barrels. Later in the day, the EIA will reveal its official weekly figures.
However, the report will hardly affect the market as traders remains focused on the Russia-Ukraine conflict. On this front, foreign ministers of Ukraine and Russia will meet in Turkey on Thursday. Should the event bring some progress towards resolving the dispute, oil prices may see a solid retreat from the current levels.