Analyzed by:Mr. Nhim Kosol Business Manager of Golden FX Link Capital
Oil has swung wildly this few weeks to reach new high of $95 a barrel amid a flurry of reports about the tensions over Ukraine. Crude price closed down 3.6% after falling nearly $5 a barrel during Tuesday trading session as Russia said some troops are starting to return to their permanent bases, easing geopolitical tensions that previously rallied prices.
Russia, after a build-up of some 130,000 troops to the north, east and south of Ukraine has declared the pulls back of it troops after exercises without mention how many units were being withdrawn. While the U.S. had earlier warned an invasion may be imminent, President Vladimir Putin said talks with German Chancellor Olaf Scholz were businesslike and could be the basis of further discussions. Moscow has repeatedly denied it plans to attack.
Still, NATO Secretary General Jens Stoltenberg said it was yet to see any signs of a reduced Russian presence along the border with Ukraine.
The Ukraine situation still remains tense as Ukrainian officials say “The threat posed by Russia will remain no matter what”. The country should be preparing for the long haul, rearranging its economy and society on the understanding that the Russian challenge to the country’s independence has become a permanent reality.
The market is holding on to every word in the standoff, with everything from natural gas and metals to global equities reacting to Russia’s comments about the pullback of troops on Tuesday.
Falling stockpiles have also 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.
Still in the U.S., producers are ramping up supplies to take advantage of higher prices. 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.
Oil investors may pay attention to this week trading range of $90-$100 a barrel
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