Companies experience a rise in oil prices as the global community eagerly anticipates the next moves in the peace efforts pertaining to Ukraine.
The global oil market is experiencing a rollercoaster ride as various factors come into play.
On Tuesday, optimism about an agreement to end the ongoing war seemed to have caused crude to fall more than 1%. However, on Wednesday, oil prices rose, with Brent crude futures increasing by 71 cents and U.S. West Texas Intermediate crude futures climbing by 84 cents. By 1207 GMT on Wednesday, Brent crude futures were at $66.50 a barrel, and U.S. West Texas Intermediate crude futures were at $63.19.
The American Petroleum Institute reported a drop in U.S. crude inventories on Wednesday, with stocks falling by 2.42 million barrels. This potential price support to oil prices comes amidst flooding at a large U.S. refinery in Whiting, Indiana. BP reported that operations at its 440,000-barrel-per-day refinery in Whiting were affected by the flooding, which may potentially weigh on crude demand at the facility. The Whiting refinery is a key fuel producer for the Midwest market.
However, the next steps in talks to end the Ukraine war are still awaited. The Russian government has so far refused to engage in direct negotiations with Ukrainian President Volodymyr Zelenskiy, demanding maximal conditions such as full recognition of Russian control over occupied regions, lifting of sanctions, and Ukraine's renunciation of NATO membership. Kremlin officials have stated no meeting with Zelenskiy is planned as long as Ukraine rejects Russia's terms.
U.S. President Donald Trump is arranging a meeting between Putin and Ukrainian President Volodymyr Zelenskiy, although it remains unclear whether this will lead to a resolution. Trump suggested potential air support as part of a deal to end Russia's war in Ukraine, but Russian President Vladimir Putin has not confirmed his participation in the talks.
Analysts are predicting continued volatility in oil prices. Giovanni Staunovo, an analyst at UBS, stated that oil prices are fluctuating, with one day seeing a drop followed by a rebound the next day. Daniel Hynes, senior commodity strategist at ANZ, stated that a quick resolution to the conflict with Russia seems unlikely.
Official data on U.S. crude inventories is expected at 1430 GMT. Russia has not confirmed whether it will participate in talks with Zelenskiy, and the next steps in the negotiations remain uncertain. As a result, oil prices are likely to continue their rollercoaster ride in the coming days.
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