Oil prices fall on Russia-Ukraine peace hopes, rising US inventories

Oil prices declined on Thursday with potential peace talks between Russia and Ukraine, data indicating an increase in US oil inventories, and uncertainty over the US Federal Reserve’s (Fed) policy roadmap.

The international benchmark Brent crude fell by 0.8%, trading at $74.24 per barrel at 10.30 a.m. local time (0730 GMT), down from $74.89 at the close of the previous session.

The US benchmark West Texas Intermediate (WTI) decreased by 0.9%, settling at $70.47 per barrel, compared to its prior session close of $71.16.

US commercial crude oil inventories rose by about 4.1 million barrels last week to 427.9 million barrels, according to the US Energy Information Administration, higher than the market prediction of 2.8 million barrels increase.

The larger-than-expected increase in inventory signaled a decline in demand in the US, the world’s largest oil consumer, pushing oil prices lower.

Additionally, concerns that US President Donald Trump’s policies could disrupt the Fed’s disinflation efforts continue to weigh on oil prices.

Also, the rise in the Consumer Price Index (CPI) in the US indicated that interest rates would stay high for longer, raising concerns about a potential economic slowdown.

The country’s CPI rose 0.5% on a monthly basis and 3% on an annual basis in January, beating expectations. The CPI recorded its fastest monthly increase since August 2023, while annual inflation reached its highest level since July 2024.

Data indicating accelerating price increases in the US also reinforces forecasts that the Fed will continue its cautious approach to interest rate cuts.

Meanwhile, improving prospects for a peace settlement in the Russia-Ukraine war eased market player’s supply concerns.

Ukrainian President Volodymyr Zelenskyy announced on Wednesday that he discussed the possibilities of achieving peace with Trump during a phone call.

Further, Trump revealed that he also spoke to his Russian counterpart Vladimir Putin, who supported his view that the time has come for them to ‘work together.’

The possibility of a peace deal that could potentially lift restrictions on Russian oil supply due to US sanctions supported the decline in prices.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) reported Wednesday that oil production fell in January, capping further price declines.

According to OPEC’s monthly oil market report, the group’s crude oil production fell by 121,000 barrels per day last month to 26.6 million barrels.