Oil prices climbed Wednesday after industry data showed a decline in U.S. crude inventories, reversing some of the previous day’s losses. Brent crude futures rose 0.7% to $66.23 a barrel, while U.S. West Texas Intermediate (WTI) gained 1% to $63 per barrel, ahead of its September contract expiry.
The American Petroleum Institute (API) reported a 2.42 million-barrel draw in U.S. crude stocks, suggesting stronger demand and lending support to prices. Official Energy Information Administration (EIA) data is due later in the day and will provide further confirmation.
Giovanni Staunovo, an analyst at UBS, noted the volatility: “Oil prices appear stuck in a cycle—down one day, up the next. The API report is supportive, and traders are finding near-term price anchors.”
Ukraine Peace Efforts Remain Uncertain
Markets also kept a close watch on geopolitical developments tied to the war in Ukraine. Earlier optimism over potential peace talks faded after President Donald Trump acknowledged that Russian President Vladimir Putin may not be ready to engage in negotiations.
Trump has floated the idea of providing U.S. air support as part of a potential deal and suggested a meeting between Putin and Ukrainian President Volodymyr Zelensky, followed by trilateral talks. However, Moscow has not confirmed participation, casting doubt on the prospects of swift progress.
Analysts caution that the absence of clarity prolongs geopolitical risk in oil markets. As Daniel Hynes, senior commodity strategist at ANZ, observed: “The likelihood of a quick resolution now seems increasingly unlikely.”
Key factors weighing on oil prices include:
- Peace Deal Uncertainty: No confirmed path forward in Russia-Ukraine talks.
- U.S. Role: Potential air support signals deeper American involvement.
- Market Sentiment: Prices remain highly sensitive to diplomatic developments.
Refinery Disruption Adds Complexity
Adding another layer to supply-demand dynamics, BP (NYSE: BP) reported disruptions at its 440,000-barrel-per-day Whiting refinery in Indiana due to flooding from severe thunderstorms. The facility, a critical fuel supplier for the Midwest, may temporarily reduce crude demand, offsetting some of the support provided by shrinking inventories.
The refinery issue highlights the fragile balance in energy markets, where unplanned outages can quickly reshape regional supply conditions. Traders will closely monitor updates on Whiting’s operations, as the facility plays a significant role in U.S. gasoline and diesel production.