Trump Spat With Ukraine Contributes To Worst Monthly Oil Losses Since September

However, some analysts think the peace deal collapse could benefit Russian oil: File Image/Pixabay

Considering the disappointment accompanying Friday's sudden collapse of the Russia/Ukraine peace talks, crude prices were surprisingly flat; however, February's bearish trading activities ensured that two key benchmarks incurred their worst monthly losses since September.

Brent settled down 86 cents at $73.18 per barrel, while Texas Intermediate crude settled down 59 cents at $69.76 per barrel.

Oil trading was in positive territory on Friday until Ukrainian president Volodymyr Zelenskiy balked at U.S. president Donald Trump's refusal to guarantee that Russia wouldn't attack his country again; the brash billionaire exited the White House without signing an agreement between the two countries for joint development of Ukraine's mineral resources – widely viewed as a key to a ceasefire and the trigger to easing U.S. sanctions against Russia.

John Kilduff, founding partner at Again Capital, viewed the spat accordingly: "This translates to a favorable posture for Russia and the potential for them to get more oil on the market."

Meanwhile, analysts braced for next week's imposition by Washington of new tariffs against Canada and Mexico, including a 10 percent tariff on imported energy resources from Canada; Ole Hansen, head of commodity strategy at Saxo Bank, said traders are reducing risks amid fears that a trade war
could slow global economic growth, worsen inflation, and cause a downturn in demand.

Han Tan, chief market analyst at Exinity Group, told media on Friday that "So long as president Trump is banging on his trade-war drums, that could sustain the risk aversion across global markets, which, in turn, is likely to keep weighing down oil benchmarks."

But market impact was hard if not impossible to predict: Calgary-based oil sands producer MEG Energy Corp. said oil sales would be free from U.S. tariffs due to its ability to access global markets via Canada's West Coast through the Trans Mountain pipeline, as well as via the U.S Gulf Coast.

Erik Alson, MEG's senior vice-president of marketing, said exports abroad via the Gulf of Mexico were at around 10 to 20 percent and that MEG would "be able to ramp up those exports very quickly."

As for oil's weak trading performance, Daniel Ghali, a commodity strategist at TD Securities, pointed out there is always opportunity in adversity by noting that algorithmic-driven investors (aka: commodity trading advisers) are taking advantage of the chronic bearishness to build a net-short position in oil for the first time since late December.