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Oil price turns negative in response to Ukraine uncertainty

Commodities Feb 23, 2022 01:37PM ET
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© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant

By Laura Sanicola

(Reuters) -Oil prices turned negative on Wednesday, after rising earlier on reports that Ukraine's government, foreign ministry and state security service were affected by a cyberattack.

Brent crude fell 11, or 0.3%, to $91.80 a barrel at 1:05 p.m. EDT (1805 GMT), after hitting $99.50 on Tuesday, the highest since September 2014.

U.S. West Texas Intermediate (WTI) crude futures fell 11 cents, or 0.1%, to $92.20 a barrel, after reaching $96 on Tuesday.

"The market is becoming more weary and gains made after the cyber attack did not hold...the calculus is too difficult to get overly concerned," John Kilduff, partner at Again Capital LLC in New York, said.

Moscow denies planning an invasion and has described warnings as anti-Russian hysteria. But it has taken no steps to withdraw the troops deployed along Ukraine's frontiers.

U.S. stocks slipped on Wednesday after giving up all of the opening gains as reports of cyberattacks on several Ukrainian state websites added to fears.

Ukraine declared a state of emergency on Wednesday and told its citizens in Russia to flee, while Moscow began evacuating its Kyiv embassy.

Oil prices rose on Tuesday on fears that sanctions imposed by Western nations on Russia, after it sent troops into two breakaway regions in eastern Ukraine, could hit energy supplies.

Sanctions imposed by the United States, the European Union, Britain, Australia, Canada and Japan were focused on Russian banks and elites, while Germany halted certification of a gas pipeline from Russia.

But the United States made it clear that sanctions agreed and those which may be imposed will not target oil and gas flows.

However, analysts expect oil prices to continue seeing support from the Russia-Ukraine crisis, with some Western countries promising more sanctions if Russia launches a full invasion.

"The prospect of more conflict in Ukraine should safeguard the geopolitical risk premium," said Stephen Brennock at brokerage PVM Oil.

"There is a risk that Russia will retaliate to the sanctions by reducing deliveries of its own accord," Commerzbank (DE:CBKG) analyst Carsten Fritsch said.

The potential return of more Iranian crude to the market weighed on prices, as Tehran and world powers inch closer to reviving a nuclear agreement.

"Nuclear talks in Vienna are reaching a sensitive and important point," Iran's foreign minister Hossein Amirabdollahian said on Wednesday.

Yet analysts say there is little chance of Iranian crude returning to the market in the immediate future to ease current supply tightness.

"If a U.S.-Iran deal is reached, it will ease some of the pressure but not enough to stop oil prices inching towards triple digits," Pratibha Thaker of the Economist Intelligence Unit said.

Oil price turns negative in response to Ukraine uncertainty
 

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Comments (9)
Darrell Peterson
Darrell Peterson Feb 23, 2022 1:54PM ET
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Russia is moving medical supplies and blood to its troops surrounding the Ukraine. Depending on the preserving solution used in the blood supplies shelf life is 21 to 49 days. invasion imminent 1 to 3 weeks.
S H Oromia
S H Oromia Feb 23, 2022 10:47AM ET
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Good
Tre Hsi
Tre Hsi Feb 23, 2022 9:47AM ET
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at this price the fracking industry are coming back
Jay Garrelts
Jay Garrelts Feb 23, 2022 8:40AM ET
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40 years of oil left
Tre Hsi
Tre Hsi Feb 23, 2022 8:40AM ET
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that's what they said 40 years ago
Vjjay Vjjay
Vjjay Vjjay Feb 23, 2022 5:58AM ET
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$100 today
Anurag Dutta
Anurag Dutta Feb 23, 2022 5:07AM ET
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$90 to $88 soon
Shep De
Shep De Feb 23, 2022 1:17AM ET
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Oil makes it in the top 4 too, #1 inflationary item into summer, we'll have sustained $110 WTI crude oil in a couple weeks and it'll not start to drop til July. Maybe (drop). 'Course, long as Russia stays inside Ukraine $95 is the floor
Shep De
Shep De Feb 23, 2022 1:13AM ET
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Oil about to moon, into spring then summer as our very rich and confidence consumer, house appreciation household wealth to tune of 167t + 3 trillion "mattress cash" is about to shop til they drop, online, offline, in long lines, , vehicles, homes, outdoor merchandise top 3 categories, all will be highly inationary by summer , as like never before, with high demand meeting shortage of supply . And, too much stuff to transport, freight , truck, with not enough truckers, so productivity will lead to inflation one more way too. Perfect storm for hyperinflation into summer too
Jeffrey Borges
Jeffrey Borges Feb 22, 2022 10:23PM ET
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👌
 
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