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Futures Movers: Oil costs rise as skeptical views emerge over progress between Russia-Ukraine talks

Energy prices rebounded on Wednesday, as skepticism emerged over progress made a day earlier in negotiations to bring an end to the war in Ukraine.

Price action

West Texas Intermediate crude for May delivery
CL00,
+2.40%

CL.1,
+2.40%

CLK22,
+2.40%
rose $2.72, or 2.6%, to $106.94. The contract fell 1.6% to $104.24 a barrel on the New York Mercantile Exchange on Tuesday, after touching a low of $98.44.

May Brent crude 
BRN00,
+2.27%

BRNK22,
+2.12%,
 the global benchmark, rose $2.65, or 2.4%, to $110.40 a barrel. Brent fell 2% to $110.23 a barrel on ICE Futures Europe on Tuesday.

May natural gas
NGK22,
+0.47%
rose 0.1% to $5.338 per million British thermal units.

April gasoline 
RBJ22,
+2.14%
rose 2.2% to $3.276 a gallon and April heating oil 
HOJ22,
+2.66%
 rose 2.3% to $3.804 a gallon.

Market drivers

Oil prices clawed back Tuesday’s losses and then some. Monday’s decline came as hopes over signs of progress between Russian and Ukraine negotiators drove investors out of the commodity. Russia’s Deputy Defense Minister Alexander Fomin reportedly said his country would decrease military activity in the direction of Kyiv and Chernihiv.

But Kremlin spokesman Dmitry Peskov was reported as saying Wednesday that Russia hadn’t noticed anything “really promising” those Ukraine proposals on Tuesday.

Ukrainian President Volodymyr Zelensky and U.S. officials also cast doubt on whether any pledge to pull Russian troops back amounted to a shift. Pentagon spokesman John Kirby said the U.S. had detected a small number of Russian ground forces backing away from Kyiv, but it looked like forces were just being repositioned.

War in Ukraine: Russia pledge to scale back some operations draws skepticism

The slide in crude this week, which has at times surpassed 10% “has made it even less likely that OPEC+ will decide at its meeting tomorrow to step up its production to a greater extent,” said Carsten Fritsch, analyst at Commerzbank, in a note to clients.

Analysts expect OPEC+ — the Organization of the Petroleum Exporting Countries and its allies, including Russia — will stick to its plan to boost production by another 400,000 barrels a day in May at its meeting on Thursday.

See: Why OPEC+ is likely to stick to its oil output plan when it meets next week

“After all, the extended cartel is likely to feel that this confirms its view that the upswing in oil prices was driven chiefly by geopolitical risks rather than by any actual shortage of supply. What is more, the price slide caused by the lockdown in Shanghai on Monday will probably make OPEC+ even more cautious as far as any risks to oil demand are concerned,” added Fritsch.

Elsewhere, Poland announced a plan to wean itself off Russian oil imports by the end of 2022, while Germany triggered an early warning over natural gas supplies, calling on consumers to conserve energy amid Russia’s demand that it pay for the commodity in rubles.

Read: Spain, Portugal emerge as ‘energy island’ in Europe’s crisis

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