WTI consolidates in mid-$90s as oil prices get some respite following brutal sell-off

Conflicting reports on the state of Russo-Ukraine peace talks – with the FT touting significant progress towards a potential 15-point peace plan but the Independent saying that Ukraine has rejected a Russian neutrality proposal – are giving oil traders plenty to think about. Having come within $1.0 of retesting the $100 level on Wednesday, front-month WTI futures are back to trading in the mid-$90s, not too far above earlier session lows and Tuesday’s weekly lows just under $94.00. At current levels in the $96.00s, WTI is up just over $1.50 on the day, marking some much-needed respite given prices had fallen over $14 on Monday and Tuesday.

Official US inventory data released not long ago was bearish, with US crude oil inventories growing by 4.3M barrels – well above the expected 1.375M barrel draw. Distillate stocks also saw a surprise build. This, alongside mixed Russo-Ukraine reports, has helped crude oil prices to stave off further declines as a result of concerns that lockdowns in China might hit demand. Ahead, WTI traders will be keeping an eye on the upcoming Fed meeting to see if it has any read across to risk appetite that might impact oil prices.

With WTI holding steady for now in the $95.00 area and above its 50-Day Moving Average around $93.00, the oil bulls will, for now, remain comfortable that the long-term uptrend in play since December 2021 is not yet dead. If anything, the recent more than 25% correction from earlier monthly highs has brought prices back to the previous trend. But headline risk remains elevated and a further widening of China lockdowns and progress in Russo-Ukraine peace talks could easily see WTI test the $90.00 area.