THE STAR – Oil prices eased yesterday as investors scooped up profits from the previous day’s rally to seven-year highs and as global stock markets slumped, although lingering concerns that Russia might invade Ukraine and disrupt energy supplies limited losses.
Brent crude futures were at USD96.04 a barrel by 0540 GMT, down 44 cents, or 0.5 per cent, after rising USD2.04 on Monday.
United States (US) West Texas Intermediate (WTI) crude dropped 52 cents, or 0.5 per cent, to USD94.94 a barrel, after gaining USD2.36 the previous day.
Both benchmarks hit their highest since September 2014 on Monday, with Brent touching USD96.78 and WTI reaching USD95.82.
Russia is one of the world’s largest oil and gas producers, and fears it could invade Ukraine have driven a rally in oil towards USD100 per barrel, a level not seen since 2014.
“Profit-taking weighed on the market while there was little fresh fundamental news and concerns over the Ukraine situation remained unchanged,” said senior economist at the NLI Research Institute Tsuyoshi Ueno.
“Investors are in a wait-and-see mood amid uncertainty over the conflict between Russia and Ukraine as well as the US-Iran nuclear talks,” he said. Portfolio managers are still bullish on the outlook for oil. But prices have already risen by more than 30 per cent in less than three months and there are growing concerns about rising inflation and interest rates, prompting fund managers to take some profit last week.
Investors are also watching talks between the US and Iran. The Iranian foreign minister said Iran was “in a hurry” to reach a swift agreement in nuclear talks in Vienna, provided its national interests are protected.
Russian Foreign Minister Sergei Lavrov spoke to his Iranian counterpart Hossein Amirabdollahian on Monday and they noted a “tangible move forward” in reviving the Iran nuclear deal, the Russian Foreign Ministry said.
“Oil markets may see a real correction if the Iran-US nuclear deal is agreed or global equities tumble further amid worries over inflation and tighter monetary policy by central banks,” said general manager of research at Nissan Securities Hiroyuki Kikukawa.
Asian share benchmarks dropped yesterday as investors contemplated the implications of a potential imminent Russian invasion of Ukraine.