By Barani Krishnan
Investing.com -- Oil prices tumbled more than 3% Tuesday, their most in a day since the year began, as Moscow wound down Russian troops that had ringed Ukraine’s borders for more than two months, removing a huge geopolitical premium from energy markets.
Crude came close to falling below the $90 per barrel mark but settled well above that. Traders now await weekly inventory data from the American Petroleum Institute, or API, that would indicate what the Energy Information Administration, or EIA, would report as last week’s closing balances of crude, gasoline and distillates.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $3.39, or 3.6%, at $92.07 per barrel. The intraday low was $90.66.
Just on Monday, WTI got to a 2014 high of $95.82 on geopolitical risks associated with Russia as the United States and Europe warned Moscow that its oil and other energy exports would face severe restrictions in the event of an attack on Ukraine.
Notwithstanding Tuesday’s drop, WTI remained up 22% on the year.
London-traded Brent, the global benchmark for oil, was down $3.42, or 3.5%, at $93.06 per barrel by 2:35 PM ET (19:35 GMT). The session low was 92.08. Brent hit a seven-year high of $96.76 on Monday and is up roughly 20% year-to-date.
At the time of writing, it wasn’t not clear how extensive the Russian retreat from Ukraine’s borders was, although there was an estimated buildup of 130,000 soldiers earlier.
U.S. President Joe Biden agreed during a call on Monday with British Prime Minister Boris Johnson that the retreat provided a crucial window for diplomacy, and was due to announce later on Tuesday details on the disengagement that the White House was aware of.
For the record, Moscow invaded and annexed the Crimean Peninsula between February and March 2014, sparking an international outcry and a wave of economic sanctions.
Experts had feared the same fate for Ukraine this time, although Moscow had insisted all along that it had no plans for an invasion. The Kremlin also said it wants to end NATO’s expansion to Eastern Europe and had repeatedly called on the non-aligned treaty to withdraw from the region.
On the inventory front, the API will release at 4:30 PM ET (21:30 GMT) data on crude, gasoline and distillate stockpiles for the week ended Feb. 11. Market participants usually use the API data to figure out what the EIA might report for the same when the U.S. government releases its own data on these at 10:30 AM on Wednesday.
For the week to Feb. 11, analysts tracked by Investing.com expect the EIA to report that crude inventories fell by 1.57 million barrels, adding to the previous week’s decline of 4.76 million barrels.
{{ecl-485||Gasoline stocks} likely rose by 550,000 barrels last week, after the previous week’s drop of 1.64 million.
Gasoline, known as petrol outside of the United States, is America’s premier fuel product. Inventories of the fuel soared ballooned over the past month as refiners appeared to be maximizing fuel processing ahead of scheduled plant maintenance in March. Escalating winter temperatures in January also typically lead to less driving among Americans.
Inventories of distillates, or heating oil, are expected to have fallen by 1.46 million barrels last week, adding to the previous week’s slide of 929,000 barrels. Distillates are refined into diesel for trucks, buses, trains and ships as well as fuel for jets.