Crude prices pared losses after a pivotal round of Russia-Ukraine peace talks did not lead to a ceasefire. Initially, oil had a precipitous fall after Moscow said they would reduce military presence near Kyiv. Energy traders are quickly abandoning USD 200 oil calls as inventories are not declining as fast.
The oil market will remain tight for quite a while as US production won’t ramp up quickly, especially after the Biden administration will resist selling offshore drilling rights in the Gulf of Mexico through at least October 2023. Russian output is expected to decline given the sanction pressure from the West.
WTI crude might be poised to trade around the USD 100 level, but if Russia-Ukraine talks take a turn for the worse, oil could return back to last week’s highs.
Gold slides on Ukraine hopes
Gold prices plunged after Russia-Ukraine peace talks yielded some progress. For a moment, it looked like the biggest geopolitical risk could be poised for a major de-escalation and the safe-haven trade was quickly abandoned. Gold will hold the USD 1900 level until it is confirmed that Russia is pulling troops. Peace talks are headed in the right direction, but it is still too early to be overly optimistic that a major de-escalation is around the corner.
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