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Futures Movers: Oil drops 3%, pulling back from 7-year high as Russia says some troops returning to base

Oil futures retreated from seven-year highs Tuesday as Russia said some troops were returning to their bases after military exercises near the border with Ukraine, potentially damping fears of an invasion.

Price action

West Texas Intermediate crude for March delivery
CL.1,
-3.34%

CL00,
-3.34%

CLH22,
-3.34%

fell $3.33, or 3.5%, to $92.13 a barrel on the New York Mercantile Exchange.

April Brent crude
BRN00,
-3.03%

BRNJ22,
-3.03%
,
the global benchmark, fell $3.06, or 3.2%, to $93.42 a barrel on ICE Futures Europe. WTI and Brent on Monday posted their highest settlements since September 2014.

March natural-gas futures
NGH22,
+3.77%

rose 3.9% to $4.36 per million British thermal units.

March gasoline futures
RBH22,
-2.93%

fell 3% to $2.6961 a gallon, while March heating oil
HOH22,
-2.95%

was down 3.1% to $2.8708 a gallon.

Market drivers

Fears of an imminent Russian invasion of Ukraine faded somewhat after Moscow said Tuesday that some units would begin returning to their bases, though Ukraine’s leaders expressed skepticism. The announcement comes a day after Russia’s foreign minister indicated Moscow was prepared to keep talking with the U.S. and its allies about security issues that have led to the Ukraine crisis.

The threat of an invasion was cited as a reason for the recent jump in crude prices that took both benchmarks near the $100-a-barrel threshold.

“In the very near term, geopolitics, and specifically the Russia-NATO tensions in Ukraine, will be the primary driver of the global oil market as an escalation will see prices push triple digits while a de-escalation would likely result in a wave of profit-taking back towards $90 a barrel in WTI,” wrote analysts at Sevens Report Research, in a Tuesday note.

Over the longer term, the global oil market remains tight with the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, continuing to undershoot collective production targets amid strong demand, they said, arguing that the “path of least resistance” remains to the upside with a medium-term price target of $105 a barrel for WTI.

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