Oil prices extended Friday's rally at the end of a volatile third week of trading after thin progress in peace talks between Russia and Ukraine raised the specter of tougher sanctions and prolonged disruptions to oil supplies.
Despite battleground setbacks and relatiative sanctions by the West, Russian President Putin has shown very little sign of relenting. US West Texas Intermediate (WTI) crude futures were up $2.93, or 2.9%, to $105.91 a barrel, adding to Thursday's 8% jump.
The fourth day of talks between Russian and Ukrainian negotiators took place via video link, but the Kremlin said an agreement had not yet been reached.
Brent crude futures jumped $2.75, or 2.6%, to $109.39 a barrel by 0405 GMT, after surging nearly 9% on Thursday in their biggest percentage gain since mid-2020.
Despite the rebound, both benchmark contracts are set to end the week down around 3%, having traded in the $16 range. Prices have dropped from a 14-year high hit nearly two weeks ago.
Oil Moves Up with Available Supplies
A supply crunch from sanctions on Russia, faltering nuclear talks with Iran, dwindling oil stockpiles, and concerns about a spike in COVID-19 cases in China hitting demand all pushed the rollercoaster ride for the week.
Analysts said comments from a Kremlin spokesman saying reports of major progress in peace talks were "false" and US President Joe Biden calling Putin a "war criminal" all sparked a wave of buying on Thursday.
RBC Capital analyst Helima Croft warned that losses in Russia's oil exports were likely to be long-lasting and barrels were offsetting the supply shortfall.
US Secretary of State Blinken is reportedly preparing to visit the UAE and Saudi Arabia later this month and oil demand will probably be high on the agenda, he said in a note.
Underlining the tight supply, consultancy FGE said stockpiles of land products in key countries were down 39.9 million barrels for the year compared to the 2017-2019 average and 45 million barrels lower year-on-year.
The volatility has afraid players out of the oil market, that successively is probably going to exacerbate value swings, traders, bankers, and analysts. In such a tight market and an illiquid paper market – you're going to get some volatility, Smirk said.
Oil prices rose early Wednesday, bouncing back after earlier falling more than $1 a barrel, as Russia's invasion of Ukraine continued to dominate volatile trade with ceasefire talks the latest market trigger.
Russia's Invasion of Ukraine Increases Oil Prices
Brent futures were up 83 cents, or 0.8%, at $100.74 a barrel by 01:20 GMT. US WTI crude was up 58 cents, or 0.6%, at $97.02 a barrel. Both contracts had previously lost more than $1, with Brent falling to $98.86 a barrel and WTI down to $94.90 a barrel.
Ukrainian President Volodymyr Zelenskiy in a very video speech discharged early Wed that land and Russia's position on peace talks measured a lot of realistic, however longer was required.
Traders are waiting for more clues from truce talks after a two-day sell-off in oil markets, but crude prices may continue to come under pressure as high inflation will eventually drag down economic growth and weaken demand.
The trading session has been volatile since Russia invaded Ukraine on February 24, with prices hitting 14-year highs on March 7, but since then Brent has fallen by nearly $40 a barrel and WTI around $34.
Prices have also come under pressure in recent days on fears of slowing Chinese demand, as the world's most populous nation and second-largest oil consumer imposed strict measures to contain the spread of COVID-19.
Meanwhile, US crude inventories rose 3.8 million barrels for the week ended March 11, while gasoline inventories fell 3.8 million barrels and distillate stockpiles rose 888,000 barrels, according to sources, who spoke on condition of anonymity.
