WTI stages massive intra-day recovery from $107.00s to $113.00s as Russia supply concerns persist

• WTI recently rallied back to session highs in the $113.00s, an impressive intra-day recovery from earlier lows in the $107.00s.
• Oil remains strongly underpinned by expectations that severe financial sanctions imposed by the West on Russia will disrupt global supply.
• Further chatter about an imminent US/Iran nuclear deal has failed to phase the oil bulls.

After dipping as low as the $107.00s per barrel in early European trade, front-month WTI futures have staged an impressive recovery and recently broke to the north of overnight highs to hit the $113.00 mark. A clean upside break to the upside would open the door, technically speaking, for a run back towards more than decade highs set earlier in the week in the $116.00s.

Oil prices remain underpinned by expectations that severe financial sanctions imposed by the West on Russia for its invasion of Ukraine will disrupt the country’s oil exports, as evidence builds that Russian sellers are having difficulty shifting product. As Russian President Vladimir Putin ramps up the intensity of his assault on Ukraine (reportedly Russian forces are leaning more towards artillery and airstrikes), risks remain tilted towards further imposition of sanctions from the West.

Fears that Western nations might ban Russian energy exports outright are another factor supporting crude oil prices and keeping the bull-run alive, even in the face of reports that a US/Iran nuclear deal might be imminent. Commodity analysts say that an end to US sanctions on Iranian oil exports as a result of a deal could see as much as 1.3M barrels per day in exports return to global markets. Strategists have warned this is unlikely to make up for the shortfall in supply from Russia.

At current levels in the $113.00s, WTI is trading with on-the-day gains of about $5.0, taking its on-the-week gains to over $21, the best percentage weekly gain since the middle of 2020. For now, the bulls remain very much in control and this doesn’t seem likely to change until there is more certainty on global supply, an unlikely prospect as the Russo-Ukraine war intensifies.