Oil prices declined by about 1% on Thursday on possible peace talks between Ukraine and Russia and concerns about rising crude inventories in the United States.
Brent crude oil fell by 81 cents, or 1.1% to $74.37 a barrel while U.S. West Texas Intermediate (WTI) crude dropped by 81 cents, or 1.1% to $70.56 a barrel as of 8:35 am Nigerian time.
The decline followed a steeper fall of more than 2% on Wednesday after former U.S. President Donald Trump announced that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy had expressed willingness to pursue peace in separate phone calls with him.
Trump directed U.S. officials to initiate talks aimed at ending the nearly three-year-long war.
The prospect of a peace deal weighed on oil prices as traders anticipated an easing of sanctions on Russian crude exports.
“Optimism that risks to crude oil supplies would ease” amid potential peace talks contributed to the price drop, ANZ analysts noted in a report.
Russia, the world’s third-largest oil producer, has faced U.S. and E.U. sanctions that have restricted its oil exports and supported global crude prices since the invasion of Ukraine.
However, the possibility of lifting these sanctions has created downward pressure on prices.
Also, rising crude inventories in the U.S. added to market concerns. According to the Energy Information Administration (EIA), U.S. crude stocks rose by 4.1 million barrels to 427.9 million barrels for the week ending February 7, surpassing analysts’ forecasts of a 3-million-barrel increase.
“This recent downturn in crude oil futures follows a period of consecutive inventory builds,” said Darren Lim, commodities strategist at Phillip Nova.
Trump’s warning of additional tariffs on U.S. trade partners further impacted market sentiment as many fear another global trade war that could slow economic growth and reduce oil demand.
“The high inflation print is a dampener, as it pushes rate cuts further back,” stated Suvro Sarkar, energy sector lead at DBS Bank.
With geopolitical tensions evolving and U.S. inventory levels climbing, market watchers are closely monitoring developments that could drive future price movements.
