Oil prices have spent this week pulling back from the two-month highs hit on Sunday night. Yesterday saw a big move lower which took both front-month WTI and Brent back below significant technical levels of $75 and $80 respectively. These levels acted as resistance for the first three weeks of this year, forming the upper band of a range with support at $70 for WTI and $75 for Brent. Last week both contracts surged above resistance following a change in tactics from Ukraine which targeted key Russian energy infrastructure with drones and missiles. But the lack of any escalation since, both in Ukraine and across the Middle East, have seen prices pull back once again. Prices fell sharply yesterday on unsubstantiated rumours of a ceasefire between Israel and Hamas. Yet the lack of a significant bounce-back once the story was rubbished would indicate that the path of least resistance for prices is down for now. Certainly, oil has been unable to stage a significant recovery following its slide from highs hit last September. Much of the downside pressure comes from concerns of reduced demand from China. Recent data releases, along with overall negative sentiment towards the country as illustrated by stock market weakness, have done nothing to offset the forecast that supply of crude should continue to outstrip demand. Yet Friday’s strong US payroll data put further pressure on prices, as the probability of a US rate cut in March has now fallen to 21%.