Crude oil futures are crashing for the second consecutive session as Ukraine-Russia peace talks and Chinese lockdowns weighed on energy commodities Tuesday. Despite fundamentals supporting global crude markets, investors are selling on rumors of Moscow’s invasion of Ukraine potentially coming to an end. Is the bull run over?
April West Texas Intermediate (WTI) crude futures tumbled $5.26, or 4.96%, to $100.70 per barrel at 13:57 GMT on Tuesday on the New York Mercantile Exchange. Despite the 10% slide in the last two sessions, US crude prices remain up more than 32% year-to-date.
Brent, the international benchmark for oil prices, is also slumping, with potential signs that the contract is paring its losses. May Brent crude futures plunged $5.28, or 4.82% to $104.32 a barrel on London’s ICE Futures exchange. Brent is up 34% on the year.
It is being reported Tuesday that the Kremlin is considering to “radically reduce” military activity outside Kyiv and Chernihiv to bolster peace negotiations. If accurate, this would be President Vladimir Putin’s first significant concession since the invasion that started more than a month ago.
Moreover, peace negotiators met in Turkey on Tuesday for the first time in two weeks, with reports that Moscow is softening some of its demands.
Meanwhile, China imposing a lockdown on Shanghai weighed on sentiment at the start of the trading week. Shanghai is the country’s largest city and financial capital, potentially impacting demand volumes in the coming weeks. The world’s second-largest economy had endured the worst public health restrictions since the beginning of the coronavirus pandemic this month.
There will be a lot of focus on global trade flows and US storage data. Russian exports of crude have declined more than 26% over the last week.
“Russian oil is still difficult to sell. Three oil tankers with a total of 280,000 tons of Urals on board have been anchored in the Mediterranean for 7-10 days, according to Bloomberg data, and are waiting in vain to be unloaded,” Commerzbank said.
In other energy markets, April natural gas futures tumbled $0.084, or 1.52%, to $5.446 per million British thermal units (Btu). April gasoline futures dropped $0.1029, or 3.22%, to $3.0933 a gallon. April heating oil futures shed $0.1254, or 3.63%, to $3.3278 per gallon.