(Bloomberg) — Oil rebounded in early Asian trading as investors cautiously assessed the outlook for a de-escalation of Russia’s war in Ukraine, which has entered its second month and rattled markets worldwide.

After losing over 8% in the two previous sessions, futures rose to $105 per barrel in New York. While Russia offered to “fundamentally cut back” its military operations in northern Ukraine, a person close to the Kremlin said the de-escalation doesn’t mean a cease-fire or complete withdrawal of troops from around the capital, Kyiv. Also, the U.S. cautioned against declaring progress.

As nations sought to boost economic growth following the pandemic, war in Europe has caused turmoil on commodity markets and increased inflation. It’s also whipped up extreme volatility, upended trade flows and squeezed already tight energy market, putting oil on track for a fourth monthly gain.

Global demand is also at risk from an increase in tensions and a possible virus resurgence. While the OPEC+ alliance will meet Thursday to discuss its May supply policy, it is likely to maintain its modest output increase strategy. 

remains deeply backwardated, where near-dated contracts are more expensive than later-dated ones, although it’s eased over the past week. In backwardation, the prompt timespread of global benchmark was $2.66/barrel compared to $3.85 per barrel a week earlier.

People familiar with figures said the American Petroleum Institute had reported that inventory fell by three million barrels last Wednesday. On Wednesday, the Energy Information Administration will publish official data.

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