Crude stable as negotiations between Russia and Ukraine hit dead end

Crude oil futures were stable in mid-afternoon trade in Asia April 13 as market participants assess the impact of the Ukraine war after Russian President Vladimir Putin vowed to continue his offensive.

At 3:30 pm Singapore time (0730 GMT), the ICE June Brent futures contract was down 4 cents/b (0.04%) from the previous close to $104.60/b, while the NYMEX May light sweet crude contract was 7 cents/b lower (0.07%) at $100.53/b.

In a public address April 12, President Putin said peace talks with Ukraine had hit a dead end, asserting that his troops would win, according to media reports.

"This raises the specter of continued risk of supply disruptions in the oil market. Europe, Russia's major customer of its crude exports, has been reluctant to implement sanctions due to its heavy reliance on the fuel," ANZ Research analysts said in an April 13 note.

The Energy Information Administration April 12 lowered its outlooks for both global oil production and consumption. This comes on the back of reduced expectations of petroleum production in Russia and lower expected consumption in China owing to current COVID-19 curbs.

Despite the lower forecast for oil consumption, EIA expects consumption to increase going into the summer. "We forecast that rising consumption, falling oil production in Russia and the risk of supply outages amid global inventory levels will support crude oil prices in the coming months," the EIA said in its latest Short-Term Energy Outlook.

While a massive release of the strategic petroleum reserve by the US and other IEA member countries to combat rising oil prices may have brought momentary relief in energy prices, analysts said this may prolong the misbalance in demand-supply by depleting reserves.

"As crude oil is traded on future expectations, the high prices today may be the new normal ahead," Avtar Sandu, senior manager commodities at Phillip Futures, said in an April 13 note.