[NEW YORK] Oil prices edged up about 1 per cent to a one-week high on Wednesday (Oct 8) as traders expected a lack of progress on a Ukraine peace deal to keep sanctions in place against Moscow, while a weekly report showed growing US oil consumption.
Brent crude futures rose 80 US cents, or 1.2 per cent, to settle at US$66.25 a barrel. US West Texas Intermediate (WTI) crude rose 82 US cents, or 1.3 per cent, to settle at US$62.55.
That was the highest close for Brent since Sep 30 and for WTI since Sep 29.
A top Russian diplomat said that the impetus to reach a peace deal with Ukraine was largely exhausted.
Analysts have said that a peace deal would likely allow more Russian oil to flow to global markets. Russia was the second-biggest crude producer in the world after the US in 2024, according to US energy data.
Despite sanctions, Russia has been gradually raising oil production and was close last month to meeting its Organization of the Petroleum Exporting Countries and allies such as Russia (Opec+) output quota, Deputy Prime Minister Alexander Novak said on Wednesday, the Interfax news agency reported.
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Moscow’s energy sector has been under serious strain in the past two months due to a wave of Ukrainian drone attacks, mainly targeting oil refineries.
Also supporting crude futures, investors expected the US Federal Reserve to keep cutting interest rates. Investors have been without most US economic data during a US government shutdown.
Fed officials agreed at their recent policy meeting that risks to the US job market had grown enough to warrant an interest rate cut, but many remained wary of high inflation, minutes of the Sep 16 to 17 session showed.
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The central bank is widely expected to cut rates by 25 basis points at its Oct 28 to 29 meeting, according to the CME Group’s FedWatch Tool.
Lower interest rates can boost economic growth and demand for oil.
US oil inventories
Oil markets held gains as traders focused more on a US report showing an increase in oil consumption last week than the bigger-than-expected increase in crude inventories.
The US Energy Information Administration (EIA) said that energy firms added 3.7 million barrels of crude into inventories during the week ended Oct 3.
That was more than the 1.9-million-barrel build analysts forecast in a Reuters poll and the 2.8-million-barrel build market sources said that the American Petroleum Institute (API) trade group cited in its figures on Tuesday.
EIA, however, did say that total weekly petroleum products supplied, a proxy for US oil consumption, rose last week to 21.990 million barrels per day, the most since December 2022.
“The demand numbers are pretty strong and that should keep the market supported,” said Phil Flynn, a senior analyst at Price Futures Group.
Opec+ production increase
Oil markets were up about 3 per cent so far this week after Opec+ on Sunday announced a smaller-than-expected output increase for November.
Opec+ agreed to raise its output targets for November by 137,000 barrels per day on growing concerns about a looming glut in the oil market, sources from the group told Reuters. REUTERS
