Russia-Ukraine ceasefire talks keep prices fluctuating
Oil prices continue to fluctuate with ceasefire talks while Russia invades Ukraine. After recovering from previous declines, prices gained over $1 per barrel on Wednesday.
Brent futures were up 97 cents, or 1%, to $100.88 a barrel at 0503 GMT. West Texas Intermediate (WTI) crude was up 45 cents, or 0.5%, at $96.89 a barrel.
Both contracts had previously dropped more than $1 a barrel, with Brent falling to $98.86 a barrel and WTI to $94.90 at the start of the session.
Ukrainian President Volodymyr Zelenskiy said in a video speech released earlier Wednesday that the positions of Ukraine and Russia in the peace talks sound more realistic, but more time is needed.
Traders are waiting for clues from the ceasefire talks after a two-day sell-off in oil markets, but high inflation and weakening demand will keep crude oil prices under pressure.
The strong US dollar is a key factor putting pressure on oil prices, and investors expect the US Federal Reserve to adopt a hawkish monetary policy to curb rising inflation.
Analysts expect the Fed to raise the benchmark overnight rate by a quarter-point at the end of Wednesday's two-day policy meeting to address rising inflation. A rise in interest rates will strengthen the US dollar and reduce demand for oil, while the stronger dollar will make oil more expensive for those who hold other currencies.
Oil sank below $100 on Tuesday for the first time since the end of February. Trading sessions have been volatile since Russia's invasion of Ukraine on February 24, with prices hitting 14-year highs on March 7, but since then Brent has dropped by about $40 a barrel and WTI by about $34.
Prices came under pressure this week due to the global concerns of low demand. Russia-Ukrain conflict and China, the world's most populous and second-largest oil consumer implemented strict measures to contain the spread of the COVID-19 Omicron variant.
By the way, new cases of COVID in China have almost halved. New cases fell by almost half from the previous day on March 15, and lockdowns in some areas could be lifted if cases ease, the country's national health commission reported.
Kovid risks are decreasing rapidly, especially with a highly vaccinated population.
Meanwhile, preliminary data from the American Petroleum Institute showed that in the week ended March 11, US crude inventories increased by 3.8 million barrels, gasoline stocks fell by 3.8 million barrels, and distillate stocks increased by 888,000 barrels.
Official US government inventory data will be released on Wednesday.
Russia's invasion of Ukraine, war scenarios that may also spread over some central European countries and rising inflation raise crude oil prices, while strong demand forecasts for 2022 are likely to decline.
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