WTI pulls back after failing to test 2014 highs in $107.50 area, still on course for historic intra-day rally

• WTI surged into the $104.00s on Tuesday, up sharply from Monday’s close in the $95.00s.
• The 2014 high in the $107.50 area has for now acted as a barrier to further upside.
• The historic intra-day rally has been driven by traders pricing in a greater risk of Russia oil supply disruption.

Oil prices have been surging on Tuesday as traders come to the realisation that financial sanctions on Russia are likely to have ramifications on the country’s ability to export energy products, even if Western sanctions don’t directly target Russian energy. Front-month WTI futures are currently on course for a historic one-day rally of just under $9.0 (or over 9%), with prices currently trading in the mid-$104.00s, up from Monday’s closing levels in the $95.00s.

That takes WTI’s on-the-week rally to just shy of $13.00. In recent trade, prices have pulled back quite aggressively from earlier peaks. WTI nearly challenged 2014 highs in the $107.50 area and at one point did eclipse $107, though profit-taking ahead of this key area of resistance took some wind out of the day’s rally. Once (if) this level is cleared, that will open the door to a test of the 2013 highs in the $112 area.

Traders seemed disappointed that major oil-consuming nations agreed to “only” release 60M barrels of oil reserves at Tuesday’s extraordinary International Energy Agency meeting, news which failed to offset bullishness after sources said OPEC+ would stick to its current output policy. Analysts expect the group of oil-producing nations to agree to another 400K barrel per day hike to output quotas in April when they meet later in the week.