Crude oil was down on Tuesday, with investors keeping a close eye on peace talks to end Russia’s war in Ukraine.
Brent crude futures lost 55 cents or 0.88 per cent to trade at $61.94 a barrel and the US West Texas Intermediate (WTI) crude futures fell by 63 cents or 1.07 per cent to $58.25 a barrel.
Ukrainian President Volodymyr Zelenskiy’s government will share a revised peace plan with the US after talks in London between Zelenskiy and the leaders of France, Germany and Britain. Peace between Ukraine and Russia could lead to the removal of international sanctions on Russian companies and free up restricted oil supply.
This has not stopped Russian offensive as the latest attacks on Ukraine’s energy system cut power access for roughly half of the residents in the Ukrainian capital Kyiv on Tuesday.
Meanwhile, the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce Russia’s oil revenue.
Also, concerns about ample supply and a looming decision on US interest rates impacted prices.
The Federal Reserve will announce its policy decision on Wednesday, with markets pricing in an 87 per cent probability of a quarter-point rate reduction. Lower interest rates typically are a positive driver for oil demand given the decrease in borrowing costs.
Yet, some analysts were cautious about how much impact this could have on oil prices for now.
The market also expects an oversupplied 2026 oil market buoyed by supply boost from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) and other non-OPEC+ countries like the US and Brazil.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States saw a large draw of 4.8 million barrels in the week ending December 5. Crude oil inventories shrank by 2.48 million barrels in the week prior. Crude oil inventories in the United States are so far showing a net increase of just 121,000 barrels for the year.
Gasoline (petrol) inventories saw a sizeable increase of 7 million barrels in the week ending December 5. In the week prior, gasoline inventories grew by 3.14 million barrels. Distillate inventories also rose in the reporting period, gaining 1 million barrels, compared to the week prior’s 2.88-million-barrel build.
Official data from the US Energy Information Agency (EIA) will be released later on Wednesday.