- Oil trades higher on Wednesday with geopolitics in the spotlight amid the disruption of gas flows to Europe via Ukraine.
- WTI has risen almost $6 on the day to $105.50, although it is down $5 on the week.
world oil prices, while still substantially lower on the week, they posted solid gains on Wednesday, with first-month WTI futures posting an aggressive recovery from the previous session’s lows below $100 a barrel. WTI is now trading above $105, still around $5 below previous weekly highs, but up nearly $6 on the day.
The ongoing slowdown in global stock markets (led by US tech) as investors worry about central bank tightening amid still-soaring inflation and slower global growth momentum can be attributed to the cause of the pullback from the recent highs above $110. But fears over supply shortages as a result of the Russo-Ukrainian war continue to attract buying after retesting of the $100 level.
Those fears have come into focus in recent weeks as the EU moves closer to a deal on a ban on all imports of Russian oil, a move that commodity strategists believe would be devastating for the country’s producers. Hungary is blocking a final deal on the embargo for now, the latest report on the subject suggests, but a compromise looks set to be reached soon.
Meanwhile, gas flows to Europe through Ukraine have been interrupted for the first time amid alleged interference in a major transit route by Russian occupying forces (so Ukraine says), marking the first interruption of gas flows in the country since the war began two and a half years. half a month ago This is also likely to provide support for oil markets on Wednesday.
WTI bulls expect a retest of recent highs above $110 in the coming days, though as long as risk appetite remains on the ropes, this will be a difficult task to manage.
Technical levels
Source: Fx Street
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