Oil prices rebounded to $95 a barrel on Wednesday as US and NATO officials say they see no signs of de-escalation in tensions between Russia and Ukraine.
US crude rose as much as 3.2% to an intraday high of $95.01 a barrel. This increase comes following oil prices fell sharply on Tuesday, following Russia announced that it would withdraw some troops once joint military exercises near Ukraine were concluded.
The rally reflects lingering concerns regarding an invasion of Ukraine that threatens to disrupt Russia’s vast energy supplies at a time when global supply is no longer keeping up with demand.
“People regained their common sense. They were hoping for the best, but there is no evidence on the ground that the pullback is a reality,” said Robert Yawger, vice president of energy futures at Mizuho Securities.
US oil hit a seven-year high of $95.82 a barrel on Monday, amid fears over the crisis in Russia and Ukraine. In recent trading, oil rose 2.7% to $94.57 a barrel. Brent crude, the world benchmark, gained 2.6% to $95.75 a barrel.
The US stock market also gave back some of its sizable gains on Tuesday, with the Dow down 225 points, or 0.6%, and the Nasdaq shedding 1%.
President Joe Biden expressed skepticism Tuesday regarding Russia’s claims to withdraw troops. Similarly, NATO Secretary-General Jens Stoltenberg said Wednesday that despite “signals from Moscow” that diplomacy should continue, “we don’t see any signs of de-escalation on the ground.”
Yawger said those comments from Biden and NATO are renewing concern in the market regarding a conflict.
“Investors justifiably believe in the president of the largest democracy on the planet and the largest military alliance in the world, rather than the president of a dictatorship,” Yawger said.
Natural gas is also rising sharply, with futures rising nearly 7% to $4.60 per million BTU.