Oil prices moved slightly higher on Thursday, recovering part of the previous session’s losses. The rebound came after U.S. data showed a larger-than-expected draw in crude inventories, which helped offset worries that a potential U.S.-backed plan to end the Russia-Ukraine war could increase global supply.
By 07:14 GMT, Brent crude futures were up 20 cents (0.31%) at $63.72 per barrel. U.S. West Texas Intermediate (WTI) futures gained 22 cents (0.37%) to $59.66 per barrel.
Both benchmarks had fallen 2.1% on Wednesday following a Reuters report that the U.S. had encouraged Ukraine to consider a draft peace framework requiring territorial concessions and limits on weaponry. Traders feared that any progress toward ending the conflict could eventually lead to eased sanctions on Russian oil, adding supply to an already well-stocked market.
Additional pressure came from the fact that producers have been increasing output, and crude continues to be stored on tankers.
In a note, ING analysts said Kyiv was unlikely to support the proposed plan because it appeared to favor Russia. However, they added that continued U.S. diplomacy reduced concerns over tougher sanctions and uncertainty around how strictly current measures will be enforced.
Supporting prices was the unexpectedly large draw in U.S. crude inventories. The Energy Information Administration reported that crude stockpiles fell by 3.4 million barrels to 424.2 million barrels for the week ending November 14. Analysts surveyed by Reuters had expected a much smaller draw of about 603,000 barrels.
Despite the bullish crude data, analysts noted that U.S. gasoline and distillate inventories increased for the first time in more than a month, hinting at softer fuel demand.
Markets are also monitoring the impact of the November 21 deadline for companies to wind down business with Rosneft and Lukoil, Russia’s two largest oil producers. The sanctions on these companies are part of U.S. efforts to pressure Moscow and influence the outcome of the war.
