Crude oil went down by more than 1 per cent on Thursday after US President Donald Trump and Russian President Vladimir Putin agreed to meet in Hungary soon to discuss ending the war in Ukraine, casting uncertainty over global energy supplies, with Brent crude losing 85 cents or 1.37 per cent to trade at $61.06 a barrel and the US West Texas Intermediate (WTI) crude shedding 81 cents or 1.39 per cent to quote at $57.46 per barrel.
President Trump said he and President Putin agreed on Thursday to meet in Budapest soon to discuss ending the war in Ukraine, one day before the US president was due to speak with Ukrainian leader Volodymyr Zelenskiy.
Although the date of the summit was not provided, this development has pushed some market participants to unwind their positions as the geopolitical tension among Russia, the US and Ukraine redevelops.
Pressure also came as crude oil inventories in the US increased by 3.5 million barrels during the week ending October 10, after gaining 3.7 million barrels in the week prior, according to new data from the US Energy Information Administration (EIA) released on Thursday.
The increase brings commercial stockpiles to 423.8 million barrels according to government data, which is still 4 per cent below the five-year average for this time of year.
The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which suggested that crude oil inventories grew by a massive 7.36 million barrels.
The data also showed a rise in US production to 13.636 million barrels per day, the highest on record, inline with expectations that there will be oversupply in the market.
Meanwhile, traders were also looking for a potential halt to India’s Russian oil imports, which could reshape flows and boost demand for supplies from elsewhere.
President Trump said Prime Minister Narendra Modi had pledged on Wednesday that India would stop buying from Russia, which is India’s top oil supplier, accounting for about one-third of its oil imports.
Reuters reported that some Indian refiners are preparing to cut Russian oil imports, with expectations of a gradual reduction. However, Russia remained confident that its energy partnership with India would continue.
Also, the British government announced new sanctions on Wednesday, directly targeting Russia’s Rosneft and Lukoil, two of the world’s biggest energy companies.