WTI Rises to $58 Over Ukraine Deal Uncertainty

SECAUCUS, NJ (DTN) – Crude futures rebounded Wednesday (11/26) amid growing uncertainty on whether the U.S. will be able to bring a quick end to the war in Ukraine. This raised the possibility that sanctions on Russia oil trade will remain in place, easing expectations of an oversupplied market.

“I think the market has priced in as much hopefulness as it can on the Ukraine peace deal; that something will come to pass soon. And I think with each passing day where there’s no deal, that optimism is starting to erode,” John Kilduff, partner at New York energy hedge fund Again Capital, told DTN.

A recent Bloomberg survey showed that some 20 oil traders and analysts do not expect a deal at all or if one materialized, it will take time to get Russian barrels flowing back to the global marketplace. U.S. sanctions against Moscow-based Rosneft and Lukoil have left millions of barrels of crude stranded at sea.

Oil prices recovered from the five-week lows of the previous session despite discrepancies between the Trump Administration and the Ukraine government about a possible peace deal with Russia. Bearish sentiment was also boosted by a weekly rise in weekly crude inventories reported by the U.S. Energy Information Administration on Wednesday.

U.S. commercial crude stocks rose by 2.8 million bbl to 426.9 million bbl during the week ending November 21, after a drop of 3.4 million bbl the prior week, the EIA said in its Weekly Petroleum Status Report. The EIA report for the latest week contradicted a 1.9-milliion bbl decrease cited by the American Petroleum Institute in its own inventory report released Tuesday (11/25).

The EIA also said that distillate oil inventories climbed by 1.1 million bbl to 112.2 million bbl and gasoline inventories grew by 2.5 million bbl to 209.9 million bbl in the latest week.

The NYMEX WTI contract for January delivery settled up $0.70 at $58.65 bbl.  ICE Brent for January delivery settled up $0.65 to $63.18 bbl.

December RBOB futures contract closed up $0.0318 to $1.889 gallon. Front-month ULSD futures contract bucked the trend, finishing down $0.0283 at $2.3255 gallon.

The U.S. Dollar Index strengthened by 0.079 points to 99.51 against a basket of foreign currencies.