Oil slides as US pushes for Russia-Ukraine peace deal

Oil prices fell on Thursday (Nov 20) as the administration of US President Donald Trump pushed for Ukraine’s acceptance of a peace agreement with Russia to end a war that has gone on for more than three years.

Brent crude futures settled at US$63.38 a barrel, down 13 US cents, or 0.2 per cent. US West Texas Intermediate crude futures finished at US$59.14 a barrel, down 30 US cents, or 0.5 per cent.

Both benchmarks rose earlier in Thursday’s session on a larger-than-expected draw on US crude supplies, reported on Wednesday by the US Energy Information Administration.

The US-Russia peace proposal includes concessions of Ukrainian territory to Russia and reductions in Ukraine’s armed forces, both of which Ukraine’s President Volodymyr Zelensky has previously rejected.

On Thursday, Zelensky said that he would look over the proposal and confer with the United States about the peace plan.

“A lot of people thought this new proposal would be dead on arrival with Zelensky, but he didn’t dismiss it out of hand,” said Phil Flynn, senior analyst with Price Futures Group. “Now the billion-dollar question is, are the sanctions going to go into effect tomorrow? If they are close, they might get lifted or delayed.”

US sanctions on trading with Russian oil companies Rosneft and Lukoil come into effect on Friday, while Lukoil has until Dec 13 to sell its sprawling international portfolio.

The bigger-than-expected draw in US crude stockpiles reflected increased refining in response to strong margins and export demand for US crude.

Crude inventories fell by 3.4 million barrels to 424.2 million in the week ended Nov 14, the Energy Information Administration said, against a draw of 603,000 barrels projected by analysts in a Reuters poll.

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That said, analysts also noted that US petrol and distillate stockpiles increased for the first time in more than a month, suggesting slowing consumption. REUTERS

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