Oil fell after Russia said some troops are starting to return to their permanent bases, easing geopolitical tensions that have rallied prices.
Futures in New York closed down 3.6% after falling nearly $5 a barrel during the session, the most since November 30. Crude has swung wildly this week amid a flurry of reports about the tensions over Ukraine. While the US had earlier warned an invasion may be imminent, President Vladimir Putin said talks with German Chancellor Olaf Scholz were businesslike and could be the basis of further discussions. Moscow has repeatedly denied it plans to attack.
Still, NATO Secretary General Jens Stoltenberg said it was yet to see any signs of a reduced Russian presence along the border with Ukraine. The market is holding on to every word in the standoff, with everything from natural gas and metals to global equities reacting to Russia’s comments about the pullback of troops on Tuesday.
“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,” said Ed Moya, Oanda’s senior market analyst for the Americas. “The Ukraine situation still remains tense and oil prices could swing $10 in either direction.”
Adding to geopolitical tensions, the underlying oil market is one of the strongest in years. S&P Global Platts assessed the Dated Brent price, which values more than half of the world’s crude, at more than $99 a barrel on Monday, traders said. Gauges of market strength along the futures curve are trading at some of their firmest levels on record as supply struggles to keep pace with booming demand.
Falling stockpiles have also been a major driver of recent gains. The industry-funded American Petroleum Institute reported on Tuesday that US crude supplies fell about 1 million barrels last week, according to people familiar with the data. The data also showed stockpiles in Cushing, Oklahoma, the biggest storage hub in the US, declined by about 2.3 million barrels. The US government will release its weekly inventory tally on Wednesday.
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