Oil prices rose about 1% on Wednesday (August 20th) on a larger-than-expected weekly decline in US crude inventories, as investors awaited the next steps in negotiations to end the Ukraine war, with sanctions on Russian crude remaining in place for now.
Brent crude rose 56 cents, or 0.9%, to $66.35 a barrel at 10:48 a.m. EDT (14:48 GMT), while US West Texas Intermediate (WTI) crude rose 66 cents, or 1.1%, to $63.01.
The US Energy Information Administration (EIA) said energy companies withdrew 6.0 million barrels of crude oil from their inventories during the week ending August 15th. The figure was larger than the 1.8 million barrel drawdown expected by analysts in a Reuters poll and the 2.4 million barrel decline cited by market sources by the American Petroleum Institute (API) trade group in its data on Tuesday.
"We've had a pretty substantial crude drawdown. We're seeing increased exports. That, along with strong refinery demand, really makes this report bullish," said John Kilduff, a partner at Again Capital. On Tuesday, crude prices fell more than 1% with WTI closing at its lowest level since May 30—amid optimism that a deal to end the Russia-Ukraine war appeared closer.
However, US President Donald Trump acknowledged that Russian President Vladimir Putin may not be eager to reach a deal. "Not so sure about the peace deal—we'll see if there's progress in the next few days. Oil prices seem to drop sharply one day, then rebound the next," said Giovanni Staunovo, an analyst at UBS.
Trump said on Tuesday that the US might provide air support as part of a deal to end Russia's war in Ukraine. The day before, Trump said he was arranging a meeting between Putin and Ukrainian President Volodymyr Zelenskiy, which would be followed by a trilateral summit between the three presidents. Russia has not confirmed it will participate in the talks with Zelenskiy.
"The likelihood of a quick resolution to the conflict with Russia now appears remote," said Daniel Hynes, senior commodity strategist at ANZ, in a note on Wednesday. (alg)
Source: Reuters
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