Crude Oil Futures Slip After 2-day Surge Amid Easing Risks

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Crude oil futures fell in mid-morning trade in Asia Feb. 15, giving up some gains after rising by more than $5/b over the last two days, as risk appetite eased slightly after repeated US warnings of an imminent Russian invasion of Ukraine, reports Platts.

Surge in front-month crude contracts

At 10:02 am Singapore time (0202 GMT), the ICE April Brent futures contract was down 35 cents/b (0.36%) from the previous close at $96.13/b, while the NYMEX March light sweet crude contract was 41 cents/b (0.43%) lower at $95.05/b.

Investors were likely booking profits after both front-month crude contracts had surged by up to 6.2% in value over the last two trading sessions.

Uncertainty over the Ukraine crisis continued to rule sentiment in oil markets, contributing to extreme volatility in oil prices. The front-month ICE Brent crude contract had oscillated between sharp gains and losses in the intra-day session Feb. 14 before settling higher by 2.2%.

Volatile trading session

Ahead of the market settle, media reports had cited unnamed US officials as stating that Russian forces had left assembly areas and were mobilizing toward attack positions along the Ukrainian border.

It was a volatile trading session yesterday for the oil markets, with Russian/Ukrainian developments dictating price action, something which is unlikely to change in the near term,” ING analysts Warren Patterson and Wenyu Yao said in a Feb. 15 note.

[Suggestions] that President Putin is willing to continue talks with the US and NATO does offer some comfort, at least in the immediate term. However, the uncertainty means that the oil market will likely continue to price in a fairly large risk premium,” they added.

Analysts noted that $100/b oil was within sight.

Brent closed 2.2% higher at $96.48/b and is just now 3.6% away from hitting the $100/b level. We think this level might be reached before the end of this quarter, if not this month,” OCBC Treasury Research analysts said in a Feb. 15 note.

Ukraine crisis

Concerns over the Ukraine crisis overshadowed reports of a continued ramp-up in US production.

The US Energy Information Administration said Feb. 14 that US crude oil production from shale was expected to spike by another 109,000 b/d in March and exceed 8.7 million b/d.

Most of that growth will yet again come from the booming Permian Basin, which is expected to rise to a new record of 5.205 million b/d in March from 5.134 million b/d in February, the EIA said.

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Source: Platts

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