WTI rallies back to $110 area as EU mulls Russia oil embargo, Russo-Ukraine peace talks stagnate

• The bulls are back in control and have pushed WTI back to the $110 area.
• Bullish catalysts include building expectations for an EU embargo of Russian oil and stagnant Russo-Ukraine peace talks.

The bulls are firmly back in control of global oil markets following a series of bullish catalysts over the weekend which have sent the front-month WTI future nearly $5.0 higher on the session to test the $110 per barrel area. As the Russian invasion of Ukraine rumbles on and Ukrainian officials defiantly reject Russian demands for its forces in the besieged city of Mariupol to surrender, EU governments are mulling whether to impose a blanket ban on Russian oil imports.

European leaders are convening with US President Joe Biden at a series of summits this weak aimed to forge agreement on strengthening of Western sanctions against Russia. News flow on the state of peace talks between Russia and Ukraine has also broadly been downbeat and, when combined with fears of restrictions on Russian oil exports, it's not too surprising to see oil prices making decent strides higher. Traders are also citing a weekend attack by Yemen’s Iran-aligned rebel Houthi militia against a Saudi Aramco refinery that caused a temporary drop in output as adding bullish impulses.

At current levels in the $109.00s, WTI is trading more than $15 higher versus last week’s lows in the $93.00 area but is still around $20 below earlier monthly highs near $130 per barrel. The significant distance that thus resides between WTI at current levels and major areas of support/resistance suggests that, from a technical perspective, choppy trading conditions are set to continue. The fundamentals back this up – as fears rebuild about how embargoed Russian oil is going to be replaced, all while global oil reserves sit at their lowest levels in years, the recipe for large swings (as already seen in March) is there.