Crude oil prices near 7-year high on stalemate in…

(MENAFN – DailyFX)

Crude Oil Prices Near 7-Year High On Ukraine Standoff, Cushing Inventory Drop

WTI crude oil prices are hovering at 7-year highs on Thursday as investors reflect on rising tensions between Russia and Ukraine in a tight market. The EIA reported a decent drop in Cushing stocks, supporting prices.


  • Crude oil prices hit new 7-year highs amid heightened tensions between Russia and Ukraine
  • U.S. Cushing crude inventories have fallen for three straight weeks, underscoring tight market conditions
  • The Fed delivered a message of hawkish bias overnight, sending the US dollar higher

Crude oil prices hover at new 7-year highs during Wednesday’s APAC midday session. WTI is trading above $86 per barrel and Brent is just below the $90 per barrel mark. Prices are well supported by heightened geopolitical tensions between Russia and Ukraine, with the former having massed troops along the border. Fears over the possibility of an invasion have rattled investors, as Ukraine is a crucial transit hub for oil and gas between Russia and the European Union.

Transit through Ukraine of Russian crude for export to the EU was 11.9 million metric tons in 2021, according to S&P Global. Therefore, a further escalation of tensions between these players will likely disrupt supply in an already tight market, pushing oil prices even higher.

Oil was also supported by rising physical demand and falling inventories. The U.S. Energy Information Administration (EIA) reported a drop of 1.823 million barrels in Cushing’s crude inventories for the week ending Jan. 21, marking a third consecutive weekly decline.

Looking ahead, oil traders will be watching next week’s OPEC+ meeting for clues about the oil cartel’s view on the supply-demand relationship. At the previous meeting, the coalition decided to increase production by 400,000 barrels per day from February to meet growing demand. They are also facing pressure from the United States to roll back some of the pandemic-era output cuts, as the US inflation rate recently hit its highest level in four decades. Worries over entrenched inflation prompted central banks to consider tightening monetary policy and encouraged major oil producers to increase output.

At Wednesday’s FOMC meeting, Fed Chairman Powell made a hawkish statement, saying “the committee is of the view to raise the federal funds rate at the March meeting.” He also said he would not rule out raising rates at each subsequent FOMC meeting, sending the US dollar index higher and stocks lower. A strong US dollar may have put downward pressure on crude oil prices, limiting their upside potential.

WTI Crude Oil Price vs DoE Total Crude Inventory

Source: Bloomberg, DailyFX

Technically, WTI is trending up in an “ascending channel,” as shown in the chart below. The upper and lower boundaries of the channel can be seen as immediate resistance and support levels respectively. A key resistance level can be found at around $87.88 – the 200% Fibonacci extension. The RSI oscillator is hovering at the overbought threshold, suggesting that prices may have risen too quickly and are therefore vulnerable to a technical pullback.

WTI Crude Oil Price – Daily Chart

— Written by Margaret Yang, Strategist for

To contact Margaret, use the Comments section below or @margaretyjy on Twitter


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Felix J. Dixon