By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) — Crude oil pulled back sharply Tuesday as fears eased that tensions between Russia and Ukraine could cause supply disruptions.
Prices had hit a five-month high on Monday over those worries.
On Tuesday, Russian troops sent on surprise military exercises in western and central Russia were ordered to return to their bases. Some of the exercises had been near the Ukraine border, which triggered concerns that Russia was building up for a massive incursion.
There is still “no firm solution for this geopolitical tension, and if the situation fuels up again, we could easily see the risk-averse trade back in, and crude oil, natural gas along with other grain commodities could soar once again,” said Naeem Aslam, chief market analyst at Ava Trade, in emailed comments early Tuesday.
“The reason is if Russia does go to a war, sanctions could be the first thing which could be imposed, and given that Russia is the major producer of natural gas and crude oil for Europe, prices could inflate very easily.”
Crude oil for April delivery CLJ4 -1.08% was last down $1.27, or 1.2%, to $103.65 a barrel. Meanwhile, Brent crude for the same month UK:LCOJ4 -1.44% fell $1.60, or 1.4%, to $109.60 a barrel.
U.S. economic news is expected to be on the light side on Tuesday, so energy trading could again be dominated by reports from Eastern Europe.
On Monday, oil futures reached their highest close in more than five months, with the U.S. benchmark settling near $105 a barrel amid fears of disruptions to global oil supplies.
Elsewhere in the energy complex on Tuesday, natural gas for April NGJ14 +3.36% rose 9 cents, or 2%, to $4.58 per million British thermal units. April gasoline RBJ4 -1.26% fell 4 cents, or 1.3%, to $2.98 a gallon, while April heating oil HOJ4 -1.46% lost 4 cents, or 1.4%, to $3.04 a gallon.
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Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.
