NEW YORK: Oil prices held at two-month lows on Wednesday as a surprise build in US fuel stockpiles signalled demand weakness and a potential peace deal between Russia and Ukraine continued to weigh on prices.
Brent crude was down 31 cents, or 0.42%, at $72.71 a barrel by 11 am EST (1600 GMT) and US West Texas Intermediate crude oil futures fell by 20 cents, or 0.29%, to $68.73. US gasoline and distillate inventories posted surprise builds last week despite crude oil stockpiles falling unexpectedly as refining activity ticked higher, the Energy Information Administration said on Wednesday.
“It seems the market didn’t like the distillate build, which might be also driven by lower refined product exports,” said Giovanni Staunovo, an analyst with UBS.
Prospects for a peace deal between Russia and Ukraine are improving, ING commodities strategists said in a note on Wednesday, adding that the market was also watching for potential implications of a minerals deal between the US and Ukraine. “This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market,” the note said.
Downside risks on oil prices increased because of US President Donald Trump’s policies, such as initiatives to support higher oil exports by Iraq, said Saxo Bank analyst Ole Hansen.
Trump’s tariff policies could also trigger a trade war and curb economic growth, Hansen added. The US and Ukraine agreed on terms of a draft minerals deal central to Trump’s efforts to bring a swift end to the war in Ukraine, sources familiar with the matter told Reuters on Tuesday.
Oil prices have been weighed down by concerns that Trump’s decisions on tariffs against China and other trading partners could hamper economic growth.
That has eased worries about tighter near-term oil supply despite fresh US sanctions against Iran, ANZ Bank analysts said in a note.
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