WTI crude settled exactly $15 lower today, or 12.1%, to $108.70. That's the largest percentage decline since November, when the omicron scare first hit.
Today's move is a tough one to explain. The backdrop is important and it comes with the entire market retracing large parts of the 'war' move around Ukraine and Russia. That's after some signs that Zelensky wants to negotiate. There's also a sense that we've seen the worst of the economic sanctions.
Both of those assumptions could be destroyed at any time but that's the ebb and flow of trading around a war.
Technically, this is also typical (albeit exaggerated). In a bull market like oil, the axiom is that prices go up the escalator and down the elevator. So long steady moves followed by sharp declines.
There were some headlines to consider:
- UAE saying it will push OPEC+ for more supply (they've done this for months)
- Iraq saying it has some spare capacity if needed (they're not meeting quotas now and added that supply is balanced)
- Zelensky saying he's ready to compromise
I don't think that's anything new or meaningful but it did seem to have an effect. I'd argue that the big trigger was technical as the selling hit not on those headlines but as $115.50 broke, which was Monday's low.
In any case, I think this signals a two-way market for now and a period of consolidation. Then again, if Russia announces tomorrow that it's limiting energy exports, it could all go crazy again.
