By Adedapo Adesanya
Crude oil prices eased on Tuesday on de-escalation in the geopolitical tensions as Russia said some of its military units were returning to their bases following exercises near Ukraine.
Brent crude fell 0.4 per cent or 40 cents to close at $92.88 per barrel compared to 28 cents or 0.3 per cent fall seen in the price of the US West Texas Intermediate (WTI) which traded at $91.79 a barrel.
The end of Russia’s military drill next to the Ukrainian border eased concerns somewhat, nudging Brent back into the lower $90 mark after touching $96 per barrel at the previous session.
Both oil benchmarks hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82. The price of Brent jumped 50 per cent in 2021, while WTI soared around 60 per cent, as a global recovery in demand from the COVID-19 pandemic strained supply.
Yet, the market is still struggling to find a good bearish story to believe in as every other factor points to a long term bullish outcome.
As Russia moved some of its troops, the market saw the move as a de-escalation between the Eastern European country and the West.
It was not clear how many units were being withdrawn, and by what distance, after a build-up of an estimated 130,000 Russian troops.
There had been heightened tensions after the US and the United Kingdom warned that Russia might invade its neighbour at any time.
On Tuesday, Ukraine blamed Russia after saying its defence ministry and two banks had been subject to a cyber attack.
The market was also weakened as investors kept watch on talks between the United States and Iran on reviving the latter’s nuclear deal with world powers, which could potentially allow for higher Iranian oil exports.
Russia noted that it had a discussion with Iran, signifying a move forward in the Iranian nuclear deal.
Yesterday, the American Petroleum Institute (API) estimated the inventory draw this week for crude oil to be 1.076 million barrels after analysts predicted a larger draw of 1.769 million barrels.
US crude inventories have shed some 80 million barrels since the start of 2021 and about 22 million barrels since the start of 2020. Global crude stockpiles are also low.
In the prior week, the API reported a draw in crude oil inventories of 2.025 million barrels after analysts had predicted a build of 675,000 barrels.
The official data from the US Energy Information Administration (EIA) will be released on Wednesday.
Dipo Olowookere