Gasoline Draw Buoys Oil, But Russia/Ukraine Peace May Extend Demand Fears

Meanwhile, Canada considers energy emergency in a bid for energy independence: File Image/Pixabay

A decline in U.S. gasoline stocks provided a fleeting bullish sentiment among largely bearish crude traders on Wednesday, enough to eke out minimal gains despite concern over the Federal Reserve deciding to hold interest rates steady.

Brent settled up 22 cents to $70.78 per barrel, and West Texas Intermediate crude settled up 26 cents at $67.16.

The Energy Information Administration reported that gasoline stocks dropped by 500,000 barrels to 240.6 million barrels in the week ended March 14; also, distillate stocks recorded the steepest draw by falling 2.8 million barrels to 114.8 million barrels last week.

However, commercial crude inventories rose by 1.7 million barrels to 437 million barrels last week.

As for the Fed, it maintained its benchmark interest rate at 4.25-4.50 percent but signalled plans for a half-percentage-point cut later this year.

Another development that could provide longer-term gains for oil were the rekindled hostilities in the Middle East, and Clay Seigle, senior fellow for energy security at the Center for Strategic and International Studies, pointed out that "Traders are being forced to refocus on Mideast geopolitical risks as Israel and the United States launch attacks on Gaza and Yemen, respectively."

Meanwhile analysts studying the prospect of peace between Russia and Ukraine said that while this would cool geopolitical tensions, it might be bearish for oil prices if U.S. president Donald Trump removed sanctions against the former Soviet Union.

Also on Wednesday, chief executives of over a dozen oil companies met with Trump to discuss the role energy plays in helping fuel American innovation as well as the president's energy vision, according to a senior White House official.

Although the meeting was private and no details were disclosed, it is widely believed that the oil bosses praised Trump's support of their industry but also warned that a proposed $50 per barrel target for crude is too low to sustain some domestic production.

Energy CEOs in Canada also made headlines on Wednesday, with 14 of them sending an open letter to that country's main political parties urging them to declare a Canadian energy crisis and accelerate new pipeline plans.

The signatories of the letter stated, "This is in answer to inquiries on how Canada can respond to escalating global energy security challenges and the urgent need for pragmatic energy strategies.

"We are at a turning point in Canada's history and national interest: there is increasing public support to urgently grow our energy sector and build energy infrastructure, including new oil and natural gas pipelines and LNG terminals, to expand Canada's energy exports."