Crude oil prices rose during early morning trade in Europe Jan. 25 amid increased concerns about rising interest rates in the US and geopolitical tensions between Russia and Ukraine, reports Platts.
At 12:15 am London time (1215 GMT), the ICE March Brent futures contract was up 40 cents at $86.67/b from the previous close while NYMEX March WTI futures was up 19 cents at $83.5/b.
Drop in crude markets
Following concerns about rising inflation rates in the US, crude markets were looking toward the Jan. 25 meeting of the Federal Open Market Committee for an update on the US Federal Reserve’s policy stance on rates.
However, a recent hawkish pivot in tone from Fed leaders has sent investors in search of safe havens, analysts said, a move that was further exacerbating the volatility seen in oil markets in the week started Jan. 23.
While crude markets dropped Jan. 24 due to a rise in risk aversion, mirrored in the broader selloff on the stock market, it was likely not a long-term position for traders. “We are seeing a significant loss of confidence,” OANDA Senior Market Analyst Ed Moya said. “The market is especially concerned that the Fed is on a course that will derail growth. Wall Street is in liquidation mode and oil is not immune to that.”
Disrupted energy flows and continued tensions
Despite the selloff, markets remained supported by a raft of factors, most notably concerns about a Russian invasion of Ukraine that could disrupt energy flows and continued tensions in the Middle East. NATO said late Jan. 24 that its allies were putting forces on standby and sending additional ships and fighter jets to NATO deployments in Eastern Europe as Russia continues its military buildup around Ukraine.
“NATO will continue to take all necessary measures to protect and defend all allies, including by reinforcing the eastern part of the alliance,” NATO Secretary General Jens Stoltenberg said in a statement late Jan. 24.
Russia has repeatedly denied planning to invade Ukraine and has denounced the buildup of troops on the Ukraine border as Western “hysteria,” according to media reports.
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Source: Platts
