Crude oil futures extend retreat as Russia-Ukraine tensions ease

Crude oil futures were lower in mid-morning trade in Asia Feb. 16, extending a selloff from the overnight session amid an easing of tensions on the Russia-Ukraine border.

At 9:54 am Singapore time (0154 GMT), the ICE April Brent futures contract was down 42 cents/b (0.45%) from the previous close at $92.86/b, while the NYMEX March light sweet crude contract was 30 cents/b (0.33%) lower at $91.77/b.

Oil prices were shedding gains of more than $5/b accrued over the Feb. 11 and Feb. 14 trading sessions after Russia said Feb. 15 it was pulling back some troops from the Ukrainian border after the completion of planned military exercises.

In addition, after talks earlier Feb. 15 with German Chancellor Olaf Scholz in Moscow, Russian President Vladimir Putin said: "We do not want war in Europe," according to media reports.

"Crude prices declined over expectations that Russia may soon pull some troops and on optimism that an Iran nuclear deal is within reach," OANDA senior market analyst Edward Moya said in a Feb. 16 note.

"Profit-taking with oil was inevitable after Russia's Defense Ministry stated that some troops are starting to return to their regular bases after completing drills," he added.

Nonetheless, analysts remained bullish on the outlook for oil prices. Demand globally continues to recover from the shock of the coronavirus omicron variant, while OPEC supply remained a laggard.

"Oil prices pulled back from their seven-year highs but still remain in a strong upward trajectory, underpinned by demand optimism and supply constraints," IG's DailyFX strategist Margaret Yang said in a note.

OCBC Treasury Research analysts said: "We remain bullish oil in the medium term as supply bottleneck constraints have yet to resolve."

The American Petroleum Institute reported US crude oil inventories fell 1.1 million barrels in the week to Feb. 11, media reports indicated, surpassing expectations of a 200,000-barrel draw in a survey of analysts by S&P Global Platts Feb. 14.

US gasoline stocks fell 923,000 barrels in the week, while distillate stocks fell 546,000 barrels, the API said.