Oil futures: Crude steadies as next Russian move eyed

Quantum Commodity Intelligence – Crude oil futures Wednesday were steady as the escalating geopolitical situation around Russia continued to dominate sentiment, underpinning the week's gains.

Front-month Jan25 ICE Brent futures were trading at $73.29/b (1710 GMT), compared to Tuesday's settle of $73.31/b but off from the day's high of $73.93/b.

At the same time Jan25 NYMEX WTI was trading at $69.28/b, versus Tuesday's settle of $69.24/b, while Dec24 was trading $69.50/b heading into the contract expiry.

Moscow has threatened to respond after Ukraine fired a US long-range missile into Russian territory, coming after the Biden administration lifted restrictions on their use.

The Kremlin also announced a change in its nuclear doctrine, which allows for the use of nuclear weapons against a conventionally armed adversary: "Any aggression against Russia by a non-nuclear state with the participation of a nuclear state will be considered a joint attack."

US officials confirmed use of the Army Tactical Missile System (Atacms) to CBS news, which followed Moscow's widespread targeting of Ukraine's power network over the weekend.

Tensions escalated further after the US embassy in Kyiv was evacuated after receiving "specific information" of a potential air strike, the US Department of State Consular Affairs said in a post on X Wednesday.

Several European embassies also closed after the warning. 

Energy 

The escalation in hostilities lifted headline prices to more than one-week highs during the early part of the week, but so far there has been no immediate disruption to energy flows.

However, analysts have said that natural gas supplies to Europe look most at risk should hostilities further escalate, while Moscow has hinted it may seek payback via various proxies such as Yemen's Houthis.

Elsewhere on the geopolitical front, the latest UN report showed that Iran continues to build stockpiles of enriched uranium, although it is looking for a deal that will limit further expansion in return for relaxing sanctions.

However, a Trump administration is expected to immediately push for tighter sanctions enforcement, which will likely restrict oil and condensate flows.

Investors largely continued to overlook inventory data as economic and geopolitical events dominated. The latest report from the American Petroleum Institute revealed a sharp increase of 4.75 million in crude stockpiles, beating expectations for a build of around 1 million barrels.

However, the build in crude stocks was in part offset by draws in gasoline and distillates.

Markets showed a similar muted reaction to EIA inventory figures released Wednesday.