Oil prices soared as tensions among Russia and those in the West over Ukraine boosted optimism as market participants predicted that global demand would keep growing strong recovery from the pandemic.
The West Texas Intermediate traded close to $94 a barrel. Brent was trading near $96 when the Kremlin declared Russian President Vladimir Putin plans to officially recognize separatists from the eastern part of Ukraine. The move could undermine peace talks between Europe and Ukraine and increase tensions with the West. Russia’s Kremlin has consistently denied that it will attack Ukraine. “The issue is that if the stresses within the Eastern Europe increase, then some of the supply may disrupt gradually by this political tensions.” It affects energy and other commodities, explained Giovanni Staunovo, a commodity analyst at UBS Group AG. “I think the market consistently reacts sensitively in such type of situations.”
Oil prices jumped on Monday after Saudi Aramco said it sees signals of rising demand, particularly in Asia. Chief executive Director of Vitol Group, the largest independent oil trading company, claimed in a Bloomberg Television interview that prices could exceed $100 per barrel for a prolonged period. The United States told allies that any Russian invasion could target cities outside the capital, Kyiv.
Moscow has repetitively denied that it is planning an invasion, declared this weekend that its troops would remain in Belarus for an extended period. Adding crude oil gains, several Organization of the Petroleum Exporting Countries (OPEC) want to continue with the overall plan and add 400,000 barrels in a day of crude oil to markets in April as per those who have been in the know about the issue.
“The crude oil demand is going to pour during the second half” and could exceed 100 million barrels per day if the travel pursues to return to normal levels. The Vitol Company CEO Russell Hardy told on Bloomberg television. “Eventually, we are going to run out of the spare capacity.”
On Monday, the trading volume was below the average level in the market due to the President’s Day celebration across the United States. That is why most of the market participants were absent.
The natural gas prices in Europe fluctuated due to Putin’s plan’s uncertainty. Crude oil investors are following negotiations to revive Iran’s 2015 nuclear deal, which has made some advancements, according to Iranian Foreign Ministry Spokesman Saeed Khatibzadeh announced at a press event. The remaining issues remain the toughest to resolve, the spokesman said.
The crude oil market’s bullishness signals, nearby contracts for the Brent and West Texas Intermediate (WTI) are commanding significant premiums over those further out, which indicate that the traders are demanding barrels right now. In Asia, refiners are looking to ramp up their run rates to gain healthy margins.
ABOUT AUTHOR
Barry is a lover of everything technology and finance (FinTech). Figuring out how the software works and creating content to shed more light on the value it offers users is his favorite pastime. When not evaluating apps or programs, he's busy trying out new healthy recipes, doing yoga, meditating, or taking nature walks with his little one.
