Oil Futures Settle Higher On Inventory Data, Fading Peace Talks Hopes

Crude oil prices climbed higher on Wednesday after data showed a drop in inventories, and amid skepticism over progress in Russia-Ukraine peace talks following Russia continuing to attack some areas in Ukraine despite its promise to scale down military operations.

Ukrainian authorities said that attacks continued overnight around Chernihiv and Kyiv, despite Russia’s pledge to scale back some military operations.

U.S President Joe Biden asked whether the Russian announcement was a sign of progress in the talks or an attempt by Moscow to buy time to continue its assault.

Data showing a bigger than expected drop in U.S. crude stockpiles last week contributed as well to the jump in oil prices.

West Texas Intermediate Crude oil futures for May ended higher by $3.58 or about 3.4% at $107.82 a barrel.

Brent crude futures were up $3.01 or 2.79% at $110.72 a barrel a little while ago.

Oil futures had posted losses in the previous two sessions amid signs of progress in Russia-Ukraine peace talks, on concerns about a possible drop in energy demand due to fresh lockdowns in Shanghai.

Data released by U.S. Energy Information Administration (EIA) this morning showed U.S. crude stockpiles fell by a bigger-than-expected 3.4 million barrels last week, cutting inventories to 410 million barrels, the lowest levels since September 2018. Crude stockpiles were expected to drop by about 1 million barrels last week.

Gasoline stocks were up by 785,000 barrels last week, as against expectations for a 1.7 million-barrel drop, while distillate stockpiles increased by 1.4 million barrels.

Investors also noted a report that said OPEC’s Joint Technical Committee has revised its estimates for first-quarter oil supply and demand. In the Committee’s estimation, the supply surplus has shrunk to 600,000 bpd, versus its previous estimate of 1 million bpd.

OPEC’s Joint Technical Committee had a meeting on Wednesday to review oil market developments ahead of the OPEC and non-OPEC Ministerial Meeting, scheduled to take place tomorrow.

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