Oil prices rose by 1 per cent a barrel on Thursday as Russia and Ukraine blamed each other for a stalled peace process, with Brent crude gaining 83 cents or 1.2 per cent to settle at $67.67 a barrel and the US West Texas Intermediate (WTI) crude soaring by 81 cents, or 1.3 per cent to close at $63.52 a barrel.
The path to peace in Ukraine remains uncertain, and this has turned oil traders cautious after a selloff over the past two weeks on hopes that US President Donald Trump would soon negotiate a diplomatic end to Russia’s war with Ukraine.
Both countries have since blamed each other for stalling the peace process, with Russia, which on Thursday launched a major air attack near Ukraine’s border with the European Union (EU), and Ukraine claiming to have hit a Russian oil refinery.
Mr Trump hosted the Ukrainian President, Mr Volodymyr Zelenskyy, and the leaders of several European countries at the White House following his meeting with the Russian President, Mr Vladimir Putin, in Alaska last week.
Despite President Trump’s attempts to draw the two sides to the negotiating table, President Putin has shown no sign of backing down from demands for territory, including land not under Russia’s military control.
Market analysts said the uncertainty in the peace talks means that the possibility of tighter sanctions on Russia has resurfaced.
Support also came from larger-than-expected drawdown from US crude stockpiles in the last week, indicating strong demand. The US Energy Information Administration (EIA) reported on Wednesday that US crude stockpiles fell 6 million barrels in the week ended August 15.
The build brings commercial stockpiles to 420.7 million barrels according to government data, which is 6% below the five-year average for this time of year.
The EIA’s data release follows figures from the American Petroleum Institute (API) that were released on Tuesday, which suggested that crude oil inventories contracted by 2.4 million barrels.
Investors were also looking to the Jackson Hole economic conference in Wyoming for signals on a possible Federal Reserve’s interest rate cut next month. The annual gathering of central bankers begins on Thursday, with Chairman Jerome Powell scheduled to speak on Friday.