Oil prices have risen as the American Petroleum Institute reported a significant drop in US crude inventories, stirring interest among investors who are closely monitoring the ongoing talks regarding the Ukraine conflict.
On Wednesday, Brent crude futures increased by 44 cents, or 0.7 per cent, reaching $66.23 a barrel by 1000 GMT. Similarly, US West Texas Intermediate crude futures for September delivery climbed 65 cents, or 1 per cent, to $63.
This uptick follows a more than 1 per cent decline in crude prices on Tuesday, driven by a brief surge of optimism over a potential agreement to resolve the Ukraine war. However, US President Donald Trump acknowledged that Russian President Vladimir Putin may not be eager to negotiate.
Oil prices: US Crude Inventories Take a Hit
According to figures from the American Petroleum Institute, US crude stocks fell by 2.42 million barrels, a trend that has likely contributed to the recent rise in oil prices. This decline was reported ahead of the official data release scheduled for 1430 GMT.
Giovanni Staunovo, an analyst at UBS, commented on the fluctuating nature of oil prices, saying, “It seems oil prices are thrown down one day, followed by a rebound the next day. The API report was on the positive side, so I assume some price support is coming from that.”
Geopolitical Tensions and Market Reactions
As the situation in Ukraine remains precarious, investors are left waiting for further developments in peace talks. Trump mentioned on Tuesday that the United States might offer air support in efforts to broker a deal to end the conflict. He also announced plans for a meeting between Putin and Ukrainian President Volodymyr Zelenskiy, with a trilateral summit involving the three leaders to follow. However, Russia has yet to confirm its participation in talks with Zelenskiy.
Daniel Hynes, senior commodity strategist at ANZ, expressed doubts regarding a swift resolution, stating, “The likelihood of a quick resolution to the conflict with Russia now seems unlikely.” The ongoing uncertainty surrounding diplomatic efforts continues to have a significant impact on the oil market.
Weather-Related Disruptions Affecting Supply
Compounding the situation, recent flooding at a major US refinery has also influenced oil prices. BP reported on Tuesday that operations at its 440,000-barrel-per-day refinery in Whiting, Indiana, were disrupted due to severe thunderstorms, which could affect crude demand at this key facility serving the Midwest market.
The combination of these factors—the decline in US crude stocks, geopolitical tensions surrounding Ukraine, and supply disruptions from weather events—has created a volatile environment for oil prices. As the situation evolves, market participants remain attentive to both geopolitical developments and domestic inventory changes.
