Crude oil prices rebounded from an earlier decline this week, driven by a report from the American Petroleum Institute (API) indicating the first weekly drop in U.S. crude inventories in over a month.
Brent crude rose to $73.21 per barrel, and West Texas Intermediate (WTI) to $69.13 per barrel following the API’s report, which showed a decrease of over 600,000 barrels for the week ending February 12. This decline contradicted analyst expectations of a substantial build, estimated at 2.3 million barrels, with some even predicting a 2.6 million barrel increase.
The potential for a peace deal between the U.S. and Russia regarding Ukraine continues to exert downward pressure on prices. Such a deal could lead to the lifting of U.S. sanctions, reducing uncertainty around Russian oil exports. ING analysts noted that progress in a U.S.-Ukraine minerals deal suggests a step closer to lifting Russian sanctions.
“Prospects for a peace deal between Russia and Ukraine are improving as the US and Ukraine agree on a minerals deal,” Warren Patterson and Ewa Manthey wrote. “It could be signed later this week. This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market.”
Further bearish factors include disappointing U.S. consumer sentiment, which fell to an eight-month low amid high inflation expectations, and Germany’s continued economic contraction in late 2024.
On the bullish side, U.S. policy towards Iran continues to support prices. However, potential tariffs on trading partners like China could dampen demand, offsetting supply concerns.
If the Energy Information Administration (EIA) confirms the inventory decline today, prices are expected to continue their upward trend through the end of the week.
