Oil Bulls Pause at Above $95 Highs, Awaiting the Word of War By

© Reuters.

By Barani Krishnan

- As ancient China’s master strategist Sun Tzu aptly observed that “in the midst of chaos, there is opportunity”, oil bulls positioned themselves on Monday for the chaos in Ukraine to disintegrate into war — and to take the market beyond the much-anticipated $100 per barrel mark.

U.S. crude pierced the $95 level the first time since 2014 while global benchmark Brent rose to just above $96 in the relentless 2-½ month-long buying mania in oil triggered by the Russia-Ukraine conflict and talk that the world might run out of supply given the limited ability — some say intent — of OPEC+ to pump more.

“The political pressure will grow for OPEC+ to hit their quotas and to promise more output, but it doesn’t seem like anything will get them to pump more except if U.S. shale booms back,” said Ed Moya, analyst at online trading platform OANDA.

“Oil’s supply and demand fundamentals are very bullish right now, so it might not take much to trigger the move towards $100 for Brent crude.”

London-traded Brent, the global benchmark for oil, finished up $1.34, or 1.4%, at $95.78 per barrel by 3:06 PM ET (20:06 GMT). The session peak was $96.76. Brent has risen 23% since the start of 2022.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up $2.36, or 2.5%, at $95.46 per barrel. The intraday high was $95.81. Year-to-date, WTI is up 26%.

Russia invaded and annexed the Crimean Peninsula between February and March 2014, sparking an international outcry and a wave of economic sanctions. Experts fear the same fate of Ukraine this time, after a massive buildup of Russian forces at the Ukrainian border in recent weeks.

White House National Security Advisor Jake Sullivan said Russia could invade Ukraine “any day now”, based on U.S. intelligence. Moscow says it wants to end NATO’s expansion to Eastern Europe and has called for intensified talks between Washington and the non-aligned treaty. 

Russian Foreign Minister Sergei Lavrov said on Monday he proposed to President Vladimir Putin that Moscow continue talks with the West and that he got an  “all right”. Oil retreated from its highs on that headline before surging back on a CBS report that Russian units near Ukraine have moved into attack positions.

On the production front, OPEC Secretary General Mohammad Barkindo told reporters that OPEC+ is trying to ensure they will be able to supply oil to global markets. But UAE Energy Minister Suhail Al Mazroui said OPEC is “aware that prices for consumers are not too high” and that there cannot be any output deal struck with any individual producers in the 26-nation group that the broader coalition did not endorse.

 

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