Oil prices experienced a slight decline on Tuesday, following a nearly 2% increase in the prior session. Market participants are closely monitoring the ongoing developments in the Russia-Ukraine conflict, given its potential implications for fuel supply dynamics in the region. Brent crude futures experienced a decline of 16 cents, representing a decrease of 0.23%, settling at $68.64 per barrel at 0005 GMT. Similarly, West Texas Intermediate (WTI) crude futures also saw a reduction of 16 cents, equating to a 0.25% drop, bringing the price to $64.64.
Both contracts experienced an increase, reaching their peak in over two weeks on Monday, as WTI futures surpassed the 100-day moving average. “The risks for crude oil prices appear tilted toward further gains, particularly if the price sustains a move above the $64-$65 resistance level,” IG analysts noted in their analysis. The recent surge in oil prices on Monday can be attributed to apprehensions regarding potential supply disruptions following Ukraine’s attacks on Russian energy infrastructure, alongside traders’ expectations of forthcoming U.S. sanctions targeting Russian oil.
The attacks have significantly impacted Moscow’s oil processing and exports, resulting in gasoline shortages in certain regions of Russia. These developments are a direct response to Moscow’s military advances on the front lines and its sustained bombardment of Ukraine’s gas and power infrastructure. Barclays, in a note to clients on Monday, indicated that oil prices are currently constrained within a narrow band, influenced by geopolitical uncertainties and fundamentally robust conditions.
U.S. President Donald Trump has reiterated his warning regarding the potential imposition of sanctions on Russia, contingent upon the advancement of a peace agreement within the forthcoming fortnight. Market participants are closely monitoring the forthcoming U.S. inventory data from the American Petroleum Institute (API) later today. Expectations suggest a decline in crude and gasoline stocks, while there may be an increase in distillate inventories.