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Oil Slumps as Russia Says Some Troops to Return to Bases


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(Bloomberg) 
Oil retreated from the highest since 2014 as traders weighed a possible cooling in the Ukrainian crisis.Brent futures fell as much as 2.1% to trade below $95 a barrel while futures in New York also slumped. Some Russian military units will start returning to their permanent bases on Tuesday after completing drills, Interfax reported, citing the Defense Ministry.Crude has swung wildly this week amid a flurry of reports about the tensions over Ukraine. While the U.S. has warned an invasion may be imminent, Moscow is now calling for a diplomatic approach and has repeatedly denied it plans an assault.

The underlying oil market is one of the strongest in years. S&P Global Platts assessed the Dated Brent price, which values more than half of the world’s crude, at more than $99 on Monday. Gauges of market strength along the futures curve are trading at some of their firmest levels on record as supply struggles to keep pace with booming demand.

Brent's prompt timespread surges amid the Ukraine crisis

“The only thing the market is really focused on at the moment is Russia-Ukraine,” said Warren Patterson, head of commodities strategy at ING Groep NV. “So developments on that front will be crucial for price direction.”

Prices:
  • WTI for March delivery slid 3.1% to $92.46 a barrel at 10:41 a.m. in London.
  • Brent for April settlement was 2.8% lower at $93.77 a barrel.

Falling stockpiles have been a major driver of recent gains, and later Tuesday the industry-funded American Petroleum Institute will issue estimates for changes in U.S. holdings. Inventories at the key storage hub at Cushing, Oklahoma have sunk for the past five weeks, according to government data.

GLJ
GLJ

See also: Goldman Says Commodities Are Its Top Asset Pick as Equities Lag

Still in the U.S., producers are continuing to ramp up supplies as crude has jumped. Production from America’s Permian Basin rose to a record for a third month in a row in January, topping 5 million barrels a day, according to data from the Energy Information Administration.

Related Coverage:
  • Oil could rise 10% if there is Russian military action in Kyiv, Ukraine, according to Citigroup Inc.
  • The European Union’s top diplomat, Josep Borrell, said that he strongly believed a nuclear accord with Iran was “in sight”.
  • OPEC is focused on keeping the market well-supplied, even as it grapples with underinvestment, according to its top official.



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