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Oil prices remained under pressure on Wednesday, trading near two-month lows as growing optimism over a potential peace deal between Russia and Ukraine weighed on the market. However, a decline in U.S. crude stockpiles provided some support, limiting further losses.
Market Performance
By 11:42 GMT, Brent crude edged lower by three cents to $72.99 per barrel, while West Texas Intermediate (WTI) crude rose by three cents to $68.96 per barrel.
Key Market Drivers
Russia-Ukraine Peace Negotiations
Investors are closely watching developments in Russia-Ukraine peace talks, with ING strategists noting that prospects for an agreement have improved. A resolution could lead to the lifting of Russian sanctions, easing concerns over supply disruptions and further pressuring oil prices. Additionally, sources reported that the U.S. and Ukraine have agreed on the terms of a draft minerals deal, which could play a role in ending the conflict.
U.S. Crude Inventory Data
Preliminary data from the American Petroleum Institute (API) indicated that U.S. crude inventories fell by 640,000 barrels in the week ending February 21. If confirmed by the Energy Information Administration (EIA) later in the day, this would mark the first decline in U.S. crude stockpiles since mid-January. Analysts surveyed by Reuters, however, had projected an increase of 2.6 million barrels, suggesting a potential divergence in expectations.
Macroeconomic Concerns and Tariff Uncertainty
Broader economic concerns continue to weigh on market sentiment. The impact of trade policies remains a key risk, particularly after recent statements by U.S. President Donald Trump regarding potential new tariffs on China and other trading partners. Market participants remain cautious about how these measures could affect global economic growth and, consequently, oil demand.
Outlook
Oil prices remain caught between opposing forces, with geopolitical developments and macroeconomic uncertainty driving volatility. While the prospect of a Russia-Ukraine peace deal is exerting downward pressure, tightening U.S. crude inventories could provide some stability. The focus now shifts to the EIA’s official inventory report and further geopolitical developments, which will shape market direction in the coming days.
