WTI pulled back from last week’s highs, trading between $88.6 and $91.8 per barrel on Tuesday. Last week, WTI price climbed to $93.4 per barrel, its highest level since 2014 and many analysts predict it will reach three-digit figures within the year.
The commodity is still 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.
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. Last week, OPEC+ agreed to increase its output by 400,000 barrels per day, but 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.
Geopolitical pressures, especially between Russia and Ukraine have been among the primary drivers of oil price increase. This week, diplomatic efforts to de-escalate the crisis continue with renewed fervour. French President Emmanuel Macron met with his Russian counterpart, Vladimir Putin, in Moscow on Monday, in a bid to avert an invasion of Ukraine. The French President had a lengthy 5-hour consultation with Putin but has not so far succeeded in de-escalating the crisis and visited Kiev on Tuesday in an attempt to promote peaceful negotiations between the two countries.
US President Joe Biden met with the new German chancellor, Olaf Scholz, on Monday to discuss the Russian-Ukraine crisis and possible sanctions against Russia. The two leaders sought to put a united front against Russia, but failed to agree on the future of the Nord Stream 2 gas pipeline. The US President was adamant that the colossal project should not be allowed to go through in case of a Russian attack against Ukraine. The German councillor did not seem to agree though, as the project will provide Germany and the Eurozone as a whole with a supply of much-needed natural gas, especially in the midst of an energy crisis and soaring energy costs in the EU.
The EU is on the brink of an energy crisis and sanctions against Russian gas and oil companies will likely exacerbate the problem. European Commission President Ursula von der Leyen stated on Monday that the EU is attempting to build a partnership for energy security with the US and other Natural Gas suppliers, in order to mitigate a potential energy crisis and shield EU consumers and households from energy shortages. In case the crisis between Russia and Ukraine de-escalates, or the Eurozone reduces its reliance on Russia for energy-related imports, the price of oil will likely go down.
On Wednesday, US Crude Oil Inventories are scheduled to be released. As existing inventories worldwide are tight, this is an important indicator for the price of oil.
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