Oil prices jumped to an eight-year high last week, amid growing fears of a Russian invasion against Ukraine. The US has warned of an imminent attack against Ukraine and oil prices soared after the announcement. Diplomatic talks and threats of sanctions against Russia seem to have little effect so far and the likelihood of war breaking out as early as this week is increasing, sending the price of oil closer to a three-digit level. The US President, Joe Biden, had an hour-long discussion with his Russian counterpart Vladimir Putin on Saturday, in what was widely seen as a last-ditch effort to avert a Russian invasion of Ukraine, but it was reported that the call brought “no fundamental change” to the issue. The US State Department has warned that an attack against Ukraine might take place at any time, while many countries, including the US, the UK and Israel are warning citizens to leave Ukraine and are evacuating personnel from their embassies.
The price of oil has been increasing over the past months, as existing international inventories are at their lowest levels in seven years and supply is trying to catch up with rising demand. US Crude Oil Inventories released last week, showed a decrease by nearly 5 million barrels. Even though OPEC has agreed to increase its output by 400,000 barrels per day, some of its member countries struggle to meet their output goal, raising doubts on whether the organisation will be able to deliver the amount promised. According to a recent OPEC report, the organisation has fallen further behind on its quota in January 2022, increasing its output by only 64,000 bpd and OPEC was 800,000 bpd behind its promised output for January. In addition, the OPEC report stated that global oil demand within the year is likely to continue increasing, reaching pre-pandemic levels.
WTI rose close to $96 per barrel on Monday, drawing closer to a three-digit figure. WTI is trading in an uptrend, but in case the uptrend is reversed, support may be found at the $82.4 per barrel level and further down around $78.8 per barrel and $77.8 per barrel.
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