By Chen Aizhu

SINGAPORE, (Reuters) – Oil prices stabilized Wednesday following a retreat of more than 3% during the previous session. Investors weighed the effect of Russia-Ukraine tension against a tight balance between global supplies and rising fuel demand.

At 0253 GMT, the price per barrel was $93.19, down 10cs. It had fallen 3.3% overnight following Russia’s announcement of a partial withdrawal from its troops in Ukraine. However, this has yet to be confirmed by the United States.

U.S. West Texas Intermediate crude (WTI), also held steady at $92.13 at 0247GMT. The contract closed Tuesday down 3.6%.

WTI reached $95.82 and Brent was at $96.78, respectively. Brent saw a 50% jump in price in 2021. WTI, however, surged 60% in response to the COVID-19 pandemic.

The Russian defense ministry released footage Tuesday showing it returning troops to their base following exercises. This move triggered oil profit taking and a rebound on Wall Street as well as European stock market.

Analysts stated that aside from the Ukraine tension, oil prices remain tight and are on track for $100/barrel.

Jonathan Barratt is chief investment officer of Probis Group. “Technically prices could return to $90/barrel on profit-taking. But they will trend higher toward $100 as the market is getting back on track” said Barratt.

German Chancellor Olaf Scholz indicated Tuesday that after meeting with Vladimir Putin for four hours, he believes there is room to do more diplomatic diplomacy and avoid war between Russia-Ukraine.

According to Edward Moya (senior Market analyst at brokerage OANDA), “Talks between President Putin and German Chancellor Scholz supported market expectations that an imminent Russian invasion seems less likely.”

The Ukraine crisis was simmering, but the U.S. Labor Department announced that producer prices rose by most in 8 months in January. This is a reminder of the possibility of high inflation throughout the year.