Oil prices rose on Wednesday, reversing earlier losses, as investors believe Russia-Ukraine peace talks are unlikely to lead to the removal of sanctions on Russian crude, though gains were limited by concerns about an overall supply surplus.
Brent crude gained 26 cents, or 0.4%, to $62.71 at 0816 GMT, while U.S. West Texas Intermediate rose 29 cents, or 0.53%, to $58.95. Both contracts fell more than 1% in the previous session.
"Oil markets and prediction markets do not appear to price a large probability of a near-term peace agreement and removal of the sanctions on Russia oil," Goldman Sachs analysts said in a note.
Russia and the U.S. did not reach a compromise on a possible peace deal for Ukraine after a five-hour meeting between Russia President Vladimir Putin and U.S. 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.
Accusations from Putin on Tuesday that European powers are hindering U.S. attempts to end the war by putting forward proposals they knew would be "absolutely unacceptable" to Moscow have increased concerns Russian supply will continue to be restricted to buyers such as China and India as the talks may not lead to a deal.
Tony Sycamore, market analyst with IG, said in a note that despite these worries about the talks being inconclusive "concerns over an oversupply glut and soft demand continue to weigh on the crude oil price, which must remain above support in the mid $50's to avoid a deeper setback."
The war in Ukraine following Russia's invasion in 2022 has widened and Ukraine is now regularly striking Russian oil infrastructure with drones.
Recent Ukrainian attacks on oil export sites on the Russian Black Sea coast have highlighted the geopolitical concerns stemming from the war.
Rising U.S. inventories also added to the concerns about a crude surplus.
The American Petroleum Institute reported on Tuesday U.S. crude and fuel inventories rose last week, market sources said, citing the API figures.
Source: Investing.com
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