Investors who participate in crude oil trading should be keeping an eye on two situations at the moment – the Ukraine crisis and supply in the U.S. According to Reuters, Brent futures reached a two-week high earlier this week in response to growing tensions in Ukraine.
Russian President Vladimir Putin recently said he would pull back troops from the boarders of the two countries. However, violence has occurred since, which renews investor worries. Also, the referendum vote in Ukraine is said to have the overwhelming support of residents, which could cause major issues, as the U.S. has already said it does not support such a move.
“Prices were boosted by the escalation of the situation in east Ukraine,” analysts at Commerzbank in Frankfurt said in a report.
Recent reports have shown that the U.S has a growing supply of oil, which could put downward pressure on prices despite escalation in Ukraine. But, the American Petroleum Institute found an unexpected decline of 590,000 barrels in crude stockpiles in Cushing, Oklahoma, according to The Associated Press. The Energy Department is also expected to announce that crude supplies dropped 1.5 million barrels last week, which is the second straight drop.
If this ends up having an impact on prices, there could be steep increases in the future, as a declining supply coupled with rising tensions in Ukraine are a combination for price hikes. Moving forward, oil traders should pay close attention to U.S. supplies and Ukraine, as changes to these situations could impact how they invest.
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