Oil Rises As Big U.S. Stockpile Build Is Ignored, Russia/Ukraine Peace Deal Is Further Analyzed

Some pundits hope for a clearcut breakthrough next week: File Image/Pixabay

Oil traders on Wednesday shrugged off a substantial build in U.S. crude inventories and maintained their focus on the Russia/Ukraine peace deal; as a result, two key benchmarks eked out modest gains.

Brent settled up 65 cents to $63.13 per barrel, and West Texas Intermediate settled up 70 cents at $58.65.

This was despite the Energy Information Administration reporting that U.S. crude inventories climbed by 2.8 million barrels to 426.9 million barrels last week, compared with expectations for a 55,000 barrel rise.

Antonio Di Giacomo, an analyst at XS.com, described the state of the oil market by writing in a note, "The crude oil market is navigating a period marked by multiple downward pressures: elevated U.S. inventories, signs of oversupply, steady OPEC+ production and diplomatic progress between Russia and Ukraine.

"Although Brent and WTI prices have stabilized temporarily, the short- and medium-term outlook remains tilted to the downside."

ING analysts added, "We are likely to get more colour on Russia's stance in the coming days, with U.S. special envoy Steve Witkoff set to visit Moscow"; that trip is scheduled for next week.

It was said that any progress in the deal could ease restrictions on Russian crude and refined products; however, this would mean more volume to what is perceived to be an oversupplied market.

For its part, Bloomberg noted that while Ukraine representatives claimed that a "good foundation" had been laid in the latest round of negotiations, "any peace deal still faces the same obstacles as in the past: What satisfies Ukraine is likely a deal-breaker for Russia, and vice versa."

Yet more speculation about the peace deal was provided on Wednesday by Dean Struyven, analyst for Goldman Sachs Group Inc; he told Bloomberg television that a successful outcome could lower oil prices by $5 per barrel, and "that would put Brent in 2026 in the low $50s."

Struyven went on to say, "Positioning remains defensive and volatility is low, which has helped anchor Brent in the $60 to $65 area for nearly two months… The peace talks add another source of supply risk and increase the chance of a move toward $60/barrel; that would then open the door for a new lower floor to be set."