Bearish sentiment has seen energy prices trade close to record lows on the near and far curve over the past few weeks. However, like every other commodity there was a fierce reaction in the energy markets at the beginning of the week on the back on the developments in Russia. After bottoming out on Friday, prices across the board shot up by almost 10% on Monday as tensions between the Ukraine and Russia reached breaking point. Russia sent troops into Crimea and surrounded ports controlled by Ukrainian forces and the beginning of a war between these two nations appeared imminent. Brent Crude oil rose to 3 month highs and market participants remained fearful of further upside as rumours spread that Russia may invade major cities like Kiev and Donetsk on the Eastern Border.

With Western powers condemning such actions, Russia stood strong and reaffirmed that they reserve the right to protect their citizens by any means necessary. Prices fell off on Tuesday and Wednesday despite warning shots being fired by Russian troops in reaction to protestors. Further downside was supported on news that Gazprom, one of Russia?s main gas suppliers, announced plans to stop discounted gas imports into Ukraine. In turn, this prompted the U.S. to strike a deal with the Ukraine, meaning, potentially more supplies for the rest of continental Europe. Despite high intra-day volatility, particularly on the prompt and near curve throughout the week, prices are now returning to last week?s levels as Russia?s grip on the Ukraine loosens, suggesting that further downside movements are a likely possibility.