Crude oil depreciated on Tuesday after Ukraine looked positive to yield to an intense diplomatic push by the United States’ administration to end Russia’s war against it.
Brent crude futures went down by 89 cents or 1.4 per cent to $62.48 per barrel and the US West Texas Intermediate (WTI) crude futures also fell by 89 cents or 1.5 per cent to $57.95 a barrel.
Ukraine backed the US-brokered plan to end the war with Russia, but the deal’s fate remains uncertain.
The White House on Tuesday acknowledged that a “few delicate, but not insurmountable” details are unresolved. Meanwhile, Russia is unlikely to accept the plan, which was revised to offer Russia concessions after the original draft crafted by US President Donald Trump’s special envoy Steve Witkoff was seen as Russia-friendly.
Ukrainian President Volodymyr Zelenskiy could visit the U.S. in the next few days to finalise a deal with President Trump to end the war.
An end to the war in Ukraine could pave the way for the unwinding of Western sanctions against Russia’s energy trade, potentially adding more supply to the oil market. Already, forecasts show that crude oil supply growth in 2026 will exceed gains in demand.
In its latest analyst note, Deutsche Bank forecasts a surplus of at least 2 million barrels per day next year and no clear path back to deficits even by 2027
A peace deal could help Russia raise oil production to its agreed volume under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+). The deal will also reverse a decline in Russian oil exports and an increase in crude oil from Russia stored in tankers at sea.
Another benefit will see the lifting of sanctions against Rosneft and Lukoil, after some refiners in India to cut back their purchases of Russian oil.
The American Petroleum Institute (API) estimated that crude oil inventories in the US saw a draw of 1.9 million barrels in the week ending November 21. Crude oil inventories gained 4.4 million barrels in the week prior. Gasoline (petrol) inventories saw an increase of 500,000 barrels in the week ending November 21, on top of the 1.5 million barrel gain in the week prior and distillate inventories also rose in the reporting period, gaining 800,000 barrels, compared to the week prior’s 600,000-barrel build.
Official stockpile data from the US Energy Information Administration (EIA) will be released later on Wednesday.