Oil rebounds after biggest one-day loss this year
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Oil rebounded yesterday after the biggest one-day loss this year as investors tried to assess whether the Ukraine crisis was easing after Russia said it had pulled some troops back from the border.
West Texas Intermediate rose towards US$93 a barrel after slumping 3.6 per cent on Tuesday following Moscow's announcement.
Asian shares also rallied, with MSCI's broadest index of Asia-Pacific shares outside Japan surging 1.23 per cent on Wednesday.
President Joe Biden said the United States has not verified the claim and cautioned that a Russian attack remains possible. Moscow has repeatedly denied it plans to invade its neighbour.
The American Petroleum Institute, meanwhile, said crude holdings at the storage hub in Cushing, Oklahoma fell 2.4 million barrels last week, according to people familiar with the figures.
With key market timespreads pointing to resilient near-term bullishness, official inventory data was to come later yesterday.
Crude is trading near the highest level since 2014 as investors bet global demand is running ahead of supply, draining inventories and forcing traders to pay steep premiums for prompt barrels.
The rally has lifted product prices including for petrol. That is fanning inflation and posing a thorny challenge for leaders including Mr Biden, as well as central bankers.
"Volatility is likely to remain a distinct feature of the oil market," said Mr Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group. "While the rhetoric was positive last night, the risks around a conflict in Ukraine are still high."
The API also reported a smaller draw in nationwide crude stockpiles, as well as slightly lower holdings of petrol and distillates.
Oil markets remain severely backwardated, a bullish pattern marked by near-term prices trading above those further out.
Brent's prompt spread, the difference between its two nearest contracts, was US$2.29 a barrel in backwardation yesterday, up from 41 US cents at the start of the year.
The market is still well supported by tightness in supply, according to Mr Hynes. "Any easing in geopolitical tension doesn't change the bullish outlook for oil prices drastically."
BLOOMBERG, REUTERS