There is still ,no firm solution for this geopolitical tension, and if the situation fuels up again, we could easily see the risk-averse trade back in, and crude oil, natural gas along with other grain commodities could soar once again.“The reason is if Russia does go to a war, sanctions could be the first thing which could be imposed, and given that Russia is the major producer of natural gas and crude oil for Europe, prices could inflate very easily.”
Crude oil for April delivery fell $1.55, or 1.5%, to $103.37 a barrel on the New York Mercantile Exchange. Meanwhile, on the ICE Futures exchange, Brent crude for the same month lost $1.94, or 1.7%, to $109.26 a barrel.
Brent crude rallied yesterday for the obvious reason that Russia is one of the largest oil producers in the world, and a military conflict could easily lead to a disruption in supply from Russia,but with the Ukrainian situation materially improving overnight, we are seeing most of the ‘fear bid’ come out of Brent crude-oil futures.
The U.S., West Texas Intermediate crude moved higher also as a result of the situation in the Ukraine, even though fundamentally, the conflict does not affect U.S. crude-oil supply or demand,what we saw yesterday shows that WTI remains an excellent global barometer of risk.And for now, as with Brent, “the ‘risk’ or ‘fear’ bid is coming out of the market as the situation continues to get better overseas.