Crude oil prices reversed a decline from the start of this week, moving higher after the American Petroleum Institute reported the first weekly decline in inventories in over a month.
If the inventory dip gets confirmed today by the Energy Information Administration, the price rise will likely extend towards the end of the week.
At the time of writing, Brent crude was trading at $73.21 per barrel, with West Texas Intermediate at $69.13 per barrel, following the API’s weekly inventory report, which estimated a dip of over 600,000 barrels for the week to February 12. The effect of the report on oil prices was very much a reaction to analyst predictions of a sizable build to the tune of 2.3 million barrels. Some analysts expected an even larger build, at 2.6 million barrels.
Meanwhile, the expectations of the United States and Russia inking a peace deal for Ukraine continued to exert downward pressure on prices as such a deal would lead to the lifting of U.S. sanctions and that would eliminate the uncertainty around Russian exports, as ING analysts wrote in a note.
“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.”
In further bearish news for oil prices, U.S. consumer sentiment was disappointing, slumping to the lowest in eight months with inflation expectations running high. Meanwhile, Germany, Europe’s biggest economy, booked a decline for yet another quarter at the end of 2024.
On the bullish side, U.S. policy towards Iran will continue to provide support for prices although tariffs on trading partners such as China would offset any concern about supply tightening in oil due to the expected negative effect of tariffs on demand for oil.
By Irina Slav for Oilprice.com
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