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Highlights
- Crude oil prices tumbled on Tuesday.
- Both oil benchmarks reached below US$100/bbl for the first time since late February.
- As per the technical charts, both oil benchmarks moved to the oversold territory which had been in overbought condition during early March.
Crude oil prices dropped more than 6% to reach their lowest level in the last three weeks as Russia suggested that it would allow a revival of the 2015 Iran nuclear deal to go forward. The prices were additionally buoyed by rising coronavirus cases in China which are expected to squeeze the demand.
Both oil benchmarks reached below US$100/bbl for the first time since late February. The prices reached 14-year high levels on 7 March 2022 and both benchmarks dropped more than US$30 from those high levels. Trading has been extremely volatile since Russia announced to invade Ukraine.
The prices for both the benchmarks tumbled for two days in a row. Earlier on Monday, the prices dropped more than 5% boosting hopes for progress towards a diplomatic end to the Russia-Ukraine tussle.
On Wednesday, May delivery Brent Crude oil futures further declined and last traded at US$97.31 per barrel up 0.90%, while April delivery WTI crude oil futures exchanged hands at US$97.36 per barrel, up 0.85% at 12:40 PM AEDT. This is the lowest level, last seen on 1 March 2022.
Also Read: Crude oil surges to 14-year highs on delays in Iranian talks
Source: Refinitiv Eikon
Source: Refinitiv Eikon
Russia-Ukraine negotiations
As per the technical charts, both oil benchmarks moved to the oversold territory which had been in overbought condition during early March. The fears of supply shortage sparked due to a ban on Russian oil seems to be overdone now.
Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars
A Ukrainian negotiator on Tuesday stated that the talks with Russia over ceasefire and withdrawal of Russian troops are on the go.
Furthermore, Russia’s positive stance to revive the Iran deal could bring 1Mbpd of oil into the market, easing the supply concerns.
Meanwhile, China has recorded a steep jump in fresh COVID-19 cases, expected to weigh the current energy demand as the nation moves to lockdown.
In addition to that, on Wednesday, the U.S. Federal Reserve is expected to raise interest rates by 25 basis points for the first time in four years to fight rising inflation.
Also Read: Crude oil slides from multi-year highs as Iran talks rev up
Bottom Line
Crude oil prices dropped significantly on Tuesday as Russia suggested that it would allow a revival of the 2015 Iran nuclear deal to go forward. At the same time, boosting hopes for progress towards a diplomatic end to the Russia-Ukraine tussle also weighted oil prices.
Here’s how commodities performed in the last week click here
