Oil prices rose slightly on Wednesday following U.S. government data that revealed a drop in fuel inventories, while investors remained focused on a temporary ceasefire in Ukraine.
Brent crude futures were up 42 cents, or 0.6%, to $70.98 a barrel at 1:40 p.m. EDT (1740 GMT). U.S. West Texas Intermediate crude (WTI) was up 43 cents, or 0.64%, at $67.33.
U.S. crude stocks rose by 1.7 million barrels to 437 million barrels last week, U.S. government data showed on Wednesday, which was higher than the 512,000-barrel rise analysts had expected.
However, distillate inventories, which include diesel and heating oil, fell by 2.8 million barrels last week to 114.8 million barrels, versus expectations for a 300,000-barrel drop.
“The EIA showed a net draw including products, which is incrementally bullish,” said Josh Young, chief investment officer at Bison Interests.
Oil prices eased about 1% in the previous session after Russia agreed to U.S. President Donald Trump’s proposal that Moscow and Kyiv temporarily stop attacking each other’s energy infrastructure, a move analysts say increases the chances for peace and could eventually pave the way for Russian oil to enter global markets.
The prospect of a full ceasefire remained uncertain. Russia and Ukraine accused each other on Wednesday of violating a new agreement to refrain from attacks on energy targets just hours after it was agreed by Trump and Russian President Vladimir Putin, but a prisoner swap went ahead.
Russian Oil Supplies Wane
“Even if a deal is struck, it will likely take some time before Russian energy exports increase in a significant way, with the short-term impact being around diversion of flows in order to attract better pricing,” said Panmure Liberum analyst Ashley Kelty.
Russia is one of the world’s top oil suppliers, but its output has waned since the beginning of the war, which resulted in sanctions on Russian energy.
Meanwhile, U.S. tariffs on Canada, Mexico and China have raised fears of recession, which weighed on oil prices as it would have a dampening effect on demand for crude.
Oil markets remain focused on price downside despite rising Middle East tensions, Goldman Sachs analysts said in a note on Wednesday.
Trump this week vowed to continue his country’s assault on Yemen’s Houthis and said he would hold Iran responsible for any attacks carried out by the group that has disrupted shipping in the Red Sea.
The Israeli military resumed ground operations in the central and southern Gaza Strip on Wednesday, a day after local health workers said more than 400 Palestinians were killed in airstrikes that shattered a ceasefire that has largely held since January.
Traders are also awaiting the outcome of the U.S. Federal Reserve policy meeting which will conclude later in the day.
Interest rate cuts typically boost economic activity and energy demand. However, the Fed is expected to hold its benchmark interest rate steady in the 4.25%-4.50% range, amid investor worries over an economic slowdown due to Trump’s tariffs.
(With inputs from Reuters)
