Political | Process

Brent was up about 6%, paring gains after surging as much 9.2% to $105.79 a barrel after President Vladimir Putin ordered Russian troops into Ukraine.

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• U.S. benchmark West Texas Intermediate briefly topped $100 a barrel before easing off of gains. Kyiv called it a “full-scale invasion” and announced martial law, while U.S. President Joe Biden said he would impose “severe sanctions” on Moscow. The White House said Biden will speak about Ukraine at 12:30 p.m. in Washington. 

• Prices came off of their highs as traders look to another potential release from the strategic reserve and more Iranian barrels added into tight market, said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

“There is going to be a place in which those two things balance out and that place will be a price,” she said. 

• The escalation has spooked a market that was already under stress, as oil supplies around the world fail to keep pace with a vigorous recovery in demand as the coronavirus pandemic recedes. The OPEC+ coalition, led by Russia and Saudi Arabia, is struggling to restore production quickly enough, prompting some of the biggest market players to warn of higher prices.

• OPEC+ meets on March 2 to decide on output for April. As of Wednesday, delegates from some of the biggest members were saying that triple-digit oil wouldn’t cause them to pump faster. Their current strategy is to add 400,000 barrels a day of crude to the market each month.

• Futures curves are steeply backwinded, a bullish pattern whereby near-term deliveries are more expensive than later ones as physical traders rush to secure supplies. Inventories at the U.S.’s biggest storage hub at Cushing, Oklahoma, fell to the lowest since September 2018 and are at their lowest seasonally in 14 years, according to an Energy Information Administration report. 

• It’s possible that OPEC increases production if there’s further escalation, according to Carole Nakhle, founder of consultant Crystol Energy.