Oil Rises with Ambiguous Russian Pullback

Oil rallied as U.S. and NATO officials reiterated they’ve yet to see evidence of a Russian pullback and a government report showed U.S. fuel demand rising. 

West Texas Intermediate closed 1.7% higher on Wednesday, clawing back from its worst slump this year on Tuesday, after U.S. officials said they haven’t verified the claim that Russia was beginning to pull back some troops from the Ukrainian border. Moscow has repeatedly denied it plans to invade its neighbor.

Without solid evidence of a Russian retreat, the narrative that cooled off prices Tuesday has shifted back to the potential for escalation, said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Adding to bullish sentiment, inventories at the biggest U.S. crude storage hub fell to the lowest since September 2018, according to an Energy Information Administration report. Meanwhile, the four-week average for deliveries of oil products from primary storage, a proxy for demand, rose to the highest in weekly data going back to 1990.

Crude is trading near the highest level since 2014 as investors bet global demand is running ahead of supply, draining inventories and forcing traders to pay steep premiums to get their hands on prompt barrels. The rally has lifted product prices, including for gasoline. That’s fanning inflation and posing a thorny challenge for leaders including U.S. President Joe Biden, as well as central bankers.

Meanwhile, a more immediate measurement of oil prices hit $100 a barrel. Dated Brent, the price of cargoes bought and sold in the North Sea, reached $100.80 a barrel on Wednesday for the first time since 2014, according to S&P Global Platts. Dated Brent reflects how traders are willing to pay up to secure actual barrels for delivery to refineries.


  • WTI for March delivery rose $1.59 to settle at $93.66 a barrel in New York.
  • Brent for April settlement added $1.53 to settle at $94.81 a barrel.

The steady erosion of supplies has pushed gauges of market strength to their strongest levels in years. The premium of Brent oil’s front-month contract to the second month -- known as prompt timespread -- expanded further after reaching the widest bullish backwardation structure since 2019 earlier this week. Spreads are typically a good indicator of underlying supply-demand dynamics, while individual futures contracts can gyrate on jitters including geopolitical risks.

(with assistance from Alex Longley)

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