Front-month Brent futures has been more supported this week. We initially oscillated between $74 and $75/bbl before breaking into the $76/bbl handle. The $77/bbl handle remains a critical resistance level, which the M1 futures contract is now flirting with at $76.95/bbl at the time of writing. The market is riddled with uncertainty surrounding the timeline for the war in Ukraine. While the US appears determined to negotiate a deal with Russia, leaving Ukraine out of the meeting room may cause some friction. On top of this, we continue to see news of drone strikes on oil and gas infrastructure in Russia and Ukraine, highlighting that the market may continue to price in geopolitical risk. On the other hand, OPEC+ is considering postponing its deadline to inject supply into the market for a fourth time, which further helped place a floor on oil prices. Still, US crude oil supplies saw a 4.6mb build in the week ending 14 Feb, announced on 20 Feb. Meanwhile, gasoline has seen a slight w/w decline in inventories for the second consecutive week. This unseasonal draw in gasoline alongside a build in crude may indicate potential refinery maintenance, potentially lending bearish sentiment to crude demand. Hence, the oil market has several moving parts to consider, which may lead players to remain on the sidelines while waiting for more clarity. However, should Brent comfortably breach the $77/bbl resistance level, we may see the bulls emerge en-masse.
