Oil settles slightly higher as Moscow peace talks fail to reach breakthrough

Recent Ukrainian attacks on oil export sites on the Russian Black Sea coast have highlighted the geopolitical concerns stemming from the war

Oil prices settled higher on Wednesday (Dec 3) after the US and Russia failed to reach a deal to end the war in Ukraine that could have eased sanctions on Moscow’s oil sector, though gains were held back by fears of oversupply.

Brent crude closed 22 US cents, or 0.4 per cent, higher at US$62.67, while US West Texas Intermediate rose 31 US cents, or 0.5 per cent, to US$58.95. Both contracts fell more than 1 per cent in the previous session.

US crude, petrol and distillate stocks rose last week, the Energy Information Administration (EIA) said on Wednesday, adding to fears of an oversupply.

Crude inventories rose by 574,000 barrels in the week ended Nov 28, the EIA said, compared with analysts’ expectations in a Reuters poll for an 821,000-barrel draw. Petrol stocks rose by 4.52 million barrels, far exceeding analysts’ expectations in a Reuters poll for a 1.5 million-barrel build.

Distillate stockpiles, which include diesel and heating oil, rose by 2.1 million barrels, which also surpassed expectations for a 0.7 million-barrel rise. The data was delayed and did not publish at 10.30 am ET (1530 GMT) as expected, with the agency citing technical difficulties.

“Overall global supply still remains pretty ample. The market is adjusting itself, as the Ukraine-Russian peace agreement is going to be delayed,” said Dennis Kissler, senior vice-president of trading at BOK Financial.

“The market is still in a very nervous trade because we have got major geopolitical issues.” Russia and the US failed to reach a compromise after a five-hour meeting between Russian President Vladimir Putin and US President Donald Trump’s top envoys, the Russian government said on Wednesday.

Oil markets are awaiting the outcome of the talks to see if a deal could lead to the removal of sanctions on Russian companies, including major oil companies Rosneft and Lukoil, that would free up restricted oil supply. Putin on Tuesday said European powers are hindering US attempts to end the war by putting forward proposals they know are “absolutely unacceptable” to Moscow.

Recent Ukrainian attacks on oil export sites on the Russian Black Sea coast have highlighted the geopolitical concerns stemming from the war.

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Ukraine also hit two sanctioned tankers involved in transporting Russian oil in the Black Sea last week.

Putin on Tuesday said Russia will take measures against tankers of countries that help Ukraine, adding to geopolitical risks, analysts said. REUTERS

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