WTI continues to chop between 50 and 21-DMAs in the low $100s as traders weigh geopolitics

Global oil markets continued to trade in a choppy fashion on Wednesday, with front-month WTI futures swinging between lows just above $100 per barrel to highs at $104, meaning the price action has remained contained within this week’s levels. At current levels in the $103 area, WTI is higher by just under $2 on the day. Technicals are playing an important role at present, with the 50-Day Moving Average just below $100 offering strong support at the same time as the 21-DMA just above $105 is offering solid resistance.

For now, it seems as though market participants are not yet willing to let WTI fall below $100, despite the announcement by US authorities of a historic crude oil reserve release last week and concerns about lockdown extensions in China. That’s probably because the geopolitical backdrop remains supportive, with Western nations readying fresh sanctions against Russia, whose military stands accused of committing widespread war crimes in Ukraine.

The European Commission on Tuesday proposed a ban on imports of Russian coal and other raw materials and said it was working on additional sanctions, including Russian oil imports. Looking ahead, official weekly US crude oil inventory data will be released at 1530 GMT and comes after private weekly API inventory data on Tuesday showed a surprise build.

But that failed to dent crude oil prices at the time. Otherwise, traders await further updates regarding Western sanctions against Russia, on the state of Russo-Ukraine peace talks, and regarding other matters such as how much oil member nations of the International Energy Agency (IEA) will release from alongside the US. Sources told Reuters on Wednesday that IEA nations haven’t yet decided how much oil to release to cool markets. For now, WTI sticking within a $100-$105 range probably makes sense.