Oil prices rose about 2% on Wednesday, supported by a bigger-than-expected drop in U.S. crude inventories. Investors also focused on the next steps in Ukraine peace talks, while sanctions on Russian crude remain in place.
Brent crude futures gained $1.05, or 1.6%, closing at $66.84 a barrel. U.S. West Texas Intermediate (WTI) crude increased 86 cents, or 1.4%, to settle at $63.21 a barrel.
The U.S. Energy Information Administration (EIA) reported that crude stockpiles fell by 6 million barrels for the week ending August 15. This was much larger than analysts’ forecast of a 1.8 million-barrel draw in a Reuters poll. It also exceeded the 2.4 million-barrel decline reported by the American Petroleum Institute (API).
John Kilduff, partner at Again Capital, said: “We had a decent-sized crude drawdown. Strong exports and refinery demand make this a bullish report.”
On Tuesday, oil prices had dropped more than 1%, with WTI hitting its lowest level since May 30, as optimism grew over a possible peace deal between Russia and Ukraine.
Analysts at Ritterbusch and Associates noted that oil’s volatile price swings are driven by daily updates on Russia-Ukraine negotiations, shifting between bearish and bullish sentiment.
U.S. President Donald Trump acknowledged that Russian President Vladimir Putin may not want a deal. Russia, the second-largest oil producer in 2024, remains crucial for global supply. Any easing of sanctions could increase Russian oil exports worldwide.
Trump ruled out deploying U.S. ground troops in Ukraine but suggested possible U.S. air support under a future peace agreement. Meanwhile, Russia warned that peace talks excluding Moscow would be a “road to nowhere.”
Russia continues to supply oil to India, despite U.S. pressure. The Kremlin hopes to expand cooperation with both India and China. In response, Trump announced a 25% tariff on Indian exports to the U.S., effective August 27, as punishment for New Delhi’s Russian oil purchases.
India’s refiners, Indian Oil and Bharat Petroleum (BPCL), bought discounted Russian crude for September and October delivery.
On the battlefield, Russia advanced in eastern Ukraine, seizing Novoheorhiivka in the Dnipropetrovsk region, near Donetsk. Analysts now believe a quick resolution to the conflict is unlikely.
In other supply developments, Iran signaled it is not yet ready for effective nuclear talks with Washington. A deal could eventually boost Iranian crude exports. Iran was OPEC’s third-largest oil producer in 2024, behind Saudi Arabia and Iraq.
Saudi Arabia’s crude exports fell in June to a three-month low, according to JODI data. Meanwhile, Norway, Europe’s second-largest oil producer after Russia, reported that July oil and gas output exceeded forecasts by 3.9%, according to the Norwegian Offshore Directorate.
