Oil prices rose by 1 per cent on Wednesday as traders expected a lack of progress on a Ukraine peace deal to keep sanctions in place against Russia.
Specifically, Brent crude futures went up by 80 cents or 1.2 per cent to $66.25 per barrel and the US West Texas Intermediate (WTI) crude grew by 82 cents or 1.3 per cent to $62.55 a barrel.
Russia reportedly believes that a peace deal to end the fighting in Ukraine, which emerged after a summit between President Vladimir Putin and President Donald Trump in August, had proven to be largely exhausted.
According to Reuters, the Deputy Foreign Minister Sergei Ryabkov, who oversees relations with the US and arms control, accused European powers, which support Ukraine, of successfully torpedoing peace efforts.
Market analysts have said a peace deal would likely allow more Russian oil to flow to global markets.
However, despite sanctions, Russia has been gradually raising oil production and was close last month to meeting its output quota set by the Organisation of the Petroleum Exporting Countries and allies (OPEC+).
Meanwhile, Russia’s energy sector has been under serious strain in the past two months due to a wave of Ukrainian drone attacks, mainly targeting oil refineries.
Also supporting crude futures, investors expected the US Federal Reserve to keep cutting interest rates.
The US central bank is widely expected to further cut rates by 25 basis points at its October 28-29 meeting.
Lower interest rates can boost economic growth and demand for oil.
Crude oil inventories in the US increased by 3.7 million barrels during the week ending October 3, after gaining 1.8 million barrels in the week prior, according to the latest data from the US Energy Information Administration (EIA) released on Wednesday.
The US EIA’s data release follows American Petroleum Institute’s (API) figures that were released a day earlier, which suggested that crude oil inventories grew by 2.780 million barrels.
The market also continued to hold onto to OPEC+ recent modest output increase for November. The alliance agreed to raise its output targets for November by 137,000 barrels per day on growing concerns about a looming glut in the oil market.