Oil Prices Drop Amid Demand Weakness, Advancing Peace Deal

Brent crude lost 49 cents or 0.67 per cent to trade at $72.53 a barrel and the US West Texas Intermediate (WTI) crude oil futures tumbled by 31 cents or 0.45 per cent to $68.62 per barrel.

US gasoline and distillate inventories posted surprise builds last week even though crude oil stockpiles fell unexpectedly as refining activity ticked higher, the US Energy Information Administration (EIA) said.

Crude oil inventories in the US saw a decrease of 2.3 million barrels during the week ending February 21.

The dip in crude inventories partially offsets the 4.6 million barrel build that the EIA estimated for the week prior.

For total motor gasoline, the EIA estimated that inventories increased by 400,000 barrels for the week to February 21, with production averaging 9.2 million barrels daily. This compares with an inventory slump of 200,000 barrels for the previous week and an average daily production of 9.2 million barrels daily.

For middle distillates, the EIA estimated an inventory increase of 3.9 million barrels for last week, with production averaging 5.2 million barrels daily. This compares to an inventory dip of 2.1 million barrels for the week prior, when production stood at an average 4.7 million barrels daily. Distillate inventories are now 8 per cent below the five-year average for this time of year.

Also, prospects for a peace deal between Russia and Ukraine are improving.

Market analysts noted that the market was also watching for implications of a minerals deal between the US and Ukraine.

The US and Ukraine agreed on terms of a draft minerals deal as all sides work towards ending the three-year war in Ukraine.

Rare earths are a class of more than about 17 minerals found in trace amounts throughout the Earth’s surface and used in products such as batteries, computers, smart phones, magnets, electric cars, and high-tech weaponry.

Risks on oil prices have also increased because of US President Donald Trump’s policies, such as initiatives to support higher oil exports by Iraq.

This is in addition to Mr Trump’s tariff policies which could also trigger a trade war and curb economic growth.