Oil Prices Fall But Hold Above $100 A Barrel As Wild Gyrations In Crude Markets Continue
In another reflection of the wild gyrations in global crude markets, oil futures declined slightly after opening higher on Wednesday and having surged over 6% in the previous session.
The benchmark Brent crude fell nearly 30 cents to about $104 a barrel, and the U.S. West Texas Intermediate (WTI) crude futures were down about 0.3% at $100 per barrel. Both contracts had risen sharply by over 6 per cent on Tuesday.
That comes after crude markets fell by around 4 per cent on Monday, following two straight weeks of weakening.
The pull and push in oil prices reflect the deepening divide and the changing opinions on the Russia-Ukraine conflict's outcome on a daily basis and the ebb and flow in the supply and demand narrative.
What has not helped the volatility in recent weeks, the most since June 20220, is there has been no let-up in Western nation's threat to isolate the world's major exporter of energy and commodities, Moscow, in retaliation to its March 22 invasion of Ukraine, the most significant attack on a European state since World War Two.
Indeed, while weak economic data and demand concerns from China's COVID restrictions are likely to keep a lid on oil gains, supply concerns will put a floor on prices as Russia said peace talks with Ukraine had hit a dead end.
Reuters reported that because of sanctions, Russian oil and gas condensate production fell on Monday to its lowest since July 2020.
What is also supporting crude futures is OPEC telling the European Union it's not possible to replace potential Russian oil supply loss and signalled it would not pump more.
"The downside for oil prices is limited," OANDA senior market analyst Jeffrey Halley told Reuters, citing peace talks hitting a dead end and comments from U.S. President Joe Biden accusing Russia of genocide. These "are reinforcing that the Ukraine Russia situation will not be de-escalating anytime soon", he added.
But demand concerns are not letting up either.
Weakening demand from the world's biggest energy buyer was reflected in data, which showed China's crude oil imports slipped 14 per cent in March from a year ago.
Economic data from China and Japan suggest slowing growth would hamper oil demand.
