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Oil dips on Russia-Ukraine talks, U.S. inventory data

Published Mar 15, 2022 10:10PM ET Updated Mar 16, 2022 03:06PM ET
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© Reuters. Oil storage containers are seen, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/Files
 
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By David Gaffen

(Reuters) -Oil lost ground for the fifth time in the last six days on Wednesday as traders reacted to hoped-for progress in Russia-Ukraine peace talks and a surprising increase in U.S. inventories.

The oil market has been on a roller-coaster for more than two weeks, and both major benchmarks have traded in their largest high-to-low range over the last 30 days than at any time since the middle of 2020.

Wednesday was no different, as global benchmark Brent traded in a $6 range, between $97.55 and $103.70 before settling at $98.02, down $1.89 a barrel, or 1.9%. U.S. West Texas Intermediate (WTI) crude ended down $1.40, or 1.5%, at $95.04 a barrel.

Last week's frenzied rally pushed Brent briefly past $139 a barrel on worries about extended disruption to Russian supply. Brent is now more than $40 below that point, and some analysts have warned that this reflects too much optimism that the war will end soon.

The United States and other nations have slapped heavy sanctions on Russia since it invaded Ukraine more than two weeks ago. This disrupted Russia's oil trade of more than 4 to 5 million barrels of crude daily.

Brent staged a 28% rally in six days and then a 24% drop over the next six sessions counting Wednesday. Prices hit a 14-year high on March 7 before pulling back.

A number of factors drove the turnaround, including modest hopes of a Russia-Ukraine peace agreement and faint signals of progress between the United States and Iran to resurrect a 2015 deal that would allow the Islamic Republic to export oil if it agrees to limit its nuclear ambitions.

Chinese demand is expected to slow due to a surge in coronavirus cases there, although figures showed fewer new cases and Chinese stimulus hopes boosted equities.

"Moving forward from here we're looking for headlines on negotiations in Russia, a cease-fire or withdrawal, or the spread of COVID in China," said Robert Yawger, director of energy futures at Mizuho.

Should the war continue, more supply will be disrupted, the International Energy Agency (IEA) said Wednesday. Three million barrels per day of Russian oil and products may not find their way to market beginning in April, the IEA said, as sanctions bite and buyers hold off. The IEA also said demand will fall, but not by as much as the potential drop in Russian supplies. [IEA/M]

U.S. inventories rose by 4.3 million barrels, against expectations for a loss, while stocks at the Cushing, Oklahoma, hub rose as well, alleviating a bit of concern about the low level of inventories there.

The Federal Reserve raised U.S. interest rates for the first time in three years, boosting the federal-funds rate by one-quarter of a percentage point, as anticipated. The oil market's basic trajectory did not change after the news.

Signs of progress in Russia-Ukraine peace talks added to the bearish tone. Ukraine's president said the positions of Ukraine and Russia were sounding more realistic, but time was needed. Russia's foreign minister said some deals with Ukraine were close to being agreed.

Oil dips on Russia-Ukraine talks, U.S. inventory data
 

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Comments (10)
John Berry
John Berry Mar 16, 2022 6:01AM ET
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By the time all is said and done oil will be at $150+. Book it
Joel Schwartz
Joel Schwartz Mar 16, 2022 5:04AM ET
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“Oil prices rise as central banks abandon their inflation mandates entirely.”
Ac Tektrader
Ac Tektrader Mar 16, 2022 12:20AM ET
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valentino so far all I see on this page is your post demonstrating a parinoid conspiracy theories ...
Niels Jorgen
Niels Jorgen Mar 16, 2022 12:20AM ET
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Well i think he is trying to sum up all the factors simply… but yeah
Mesi King
Mesi King Mar 15, 2022 11:18PM ET
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We need peace . You guys full of war mind /negative attitude..... ceasse fire and permanent peace thats all we need
Niels Jorgen
Niels Jorgen Mar 15, 2022 11:18PM ET
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Ya problem is when someone plans an invasion for 10-12 years can you really trust the peace in those countries where all power is focused in one man…
Cujo Modded
Cujo Modded Mar 15, 2022 11:18PM ET
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The up and down of oil is hurting
John Berry
John Berry Mar 15, 2022 10:49PM ET
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Here we go. More BS
Kelly Mayer
Kelly Mayer Mar 15, 2022 10:38PM ET
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Star a war. Stage fake ceasse fire talks to control the markets. Conquer a new country while diverting attention to fake ceasse fire talks. Profit of a lifetime in the end. There is no ceasse fire. Only war in very advanced stages. Do you really think Putin would let go of all that has already cost thousands of lives to conquer? I'm not sure wars work like that. Sanctions are permanent. Its the dawn of a new world. Wake up. A new market about to rise. Oil will shoot up to 200 usd soon, and they will have to switch to nuclear energy and others. EU 5 seconds away from recession, and the US will soon head there. Position yourselves now in the right investments or lose everything you have invested when these fake news collapse. Its going to be fast and painful. Sea of red for stocks.
Rise Unlimited
Rise Unlimited Mar 15, 2022 10:38PM ET
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Not that off actually but could go the other way too. Sanction, usd, money flow, consumption. Back to normal soon or depression will be called recession but actually a correction.
Edward Chong
Edward Chong Mar 15, 2022 10:38PM ET
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yes oil will hit 200 in the year 2122. i am sure !
jason xx
jason xx Mar 15, 2022 10:38PM ET
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Is there anything that's ever happened that's wasn't a conspiracy?
Expressions Productions
Expressions Productions Mar 15, 2022 10:36PM ET
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It looks like most market publications mustvhave extensive short on equities and long on oil. Media is full of nonsense.
Max Rochester
Max Rochester Mar 15, 2022 10:23PM ET
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wait till tomorrow to post this its not Wednesday yet .. you posted this on Mar 15, 2022 10:16PM ET)
Max Rochester
Max Rochester Mar 15, 2022 10:19PM ET
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oil prices climb lol it fell from 130 and hasn't even gone back over 100
 
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