Oil prices rebounded on Wednesday after sliding to their lowest level in more than a month in the previous session, as global markets weighed diplomatic developments surrounding the Russia-Ukraine conflict and the broader outlook for energy demand.
At 05:12 a.m. WAT, Brent crude futures gained 27 cents, or 0.43%, to trade at $62.75 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 24 cents, or 0.41%, to $58.19 per barrel. Both benchmarks had settled 89 cents lower on Tuesday, following signals that Ukrainian President Volodymyr Zelenskiy was prepared to advance a U.S.-backed framework aimed at ending the war with Russia.
Market analyst Tony Sycamore, in a note cited by Reuters, cautioned that the potential peace agreement could have sweeping supply-side implications if concluded. According to him, the dismantling of Western sanctions on Russian oil exports could drive WTI prices down to around $55, adding that the market was currently “waiting for more clarity” and that downside risk would remain unless the talks collapsed.
Diplomatic engagement intensified as U.S. President Donald Trump announced he had directed his representatives to hold separate consultations with Russian President Vladimir Putin and Ukrainian officials. A Ukrainian government source also indicated that Zelenskiy may travel to the United States in the coming days to finalise aspects of the agreement.
The negotiations unfold against the backdrop of renewed Western pressure on Moscow. The United Kingdom, the United States, and European partners have recently tightened sanctions, while Indian imports of Russian crude traditionally a stabilising outlet are projected to fall to their lowest level in three years by December.
Domestic supply data further complicated the outlook. U.S. crude inventories unexpectedly declined last week, even as fuel stocks rose, diverging from earlier estimates in a Reuters poll that had projected a 1.86 million-barrel increase in crude inventories for the week ending November 21. Official figures from the Energy Information Administration are scheduled for release at 10:30 a.m. ET (3:30 p.m. GMT).
Investor sentiment has received some support from expectations of a U.S. Federal Reserve interest rate cut in December, following recent indicators of softer inflation and reduced retail spending. Analysts note that lower borrowing costs would likely stimulate economic activity and strengthen oil demand, even as geopolitical uncertainty continues to steer price volatility.
