WTI bounces back after brief dip below $100

• WTI has been volatile on Tuesday and is currently trading at $102.50, near the middle of the $98.50-$107.80 range.
• Prices have been weighed down by positive headlines from Russia and Ukraine and ongoing concerns about the Chinese lockdown.

oil prices have seen several moves on Tuesday. Previous month WTI futures are currently trading at $102.50, slightly below the middle of the range, between $98.50 and $107.80. For the week, WTI losses currently amount to more than $10, with the main bearish news coming from China, where the Covid-19 outbreak continues to spread and authorities continue to try to eradicate it under their so-called “Covid zero” strategy. Shanghai was the latest place to go into a strict lockdown as infections in the city rise and this is a major issue playing on the minds of global oil market participants given China’s status as a major consumer and a massive importer of black gold.

But the main catalyst behind Tuesday’s most recent volatility, ie the reason why WTI fell almost $10 from session highs, has been recent positive updates from Russia and Ukraine. The peace talks concluded and were framed as constructive by both sides, with the Ukrainians making a new security proposal to the Russians and hinting at a possible presidential meeting between the two sides. Meanwhile, the Russian Defense Ministry said it was reducing military activities in cities in northern Ukraine to foster more conducive conditions for negotiations.

While WTI clearly remains vulnerable to both a Chinese blockade and headlines related to the progress of the Russia-Ukraine peace talks, a few factors may help shore things up. First, Western leaders have said that a Russia-Ukraine peace deal does not mean an immediate end to sanctions, meaning severe disruptions to Russian oil exports are not likely to abate anytime soon. regardless of events in Ukraine. Second, recent comments from OPEC members suggest a more significant boost in production is not forthcoming. Oil’s roller coaster ride is likely to continue, but it is still too early to bet on a return to pre-Russo-Ukrainian war levels below $90.00.

Technical levels