[HOUSTON] Oil prices steadied on Friday (Aug 22) amid uncertainty surrounding a potential peace deal between Russia and Ukraine, with prices gaining on the week for the first time in three weeks.
Brent crude futures settled up 6 US cents or 0.09 per cent to US$67.73. West Texas Intermediate (WTI) crude futures settled up 14 US cents or 0.22 per cent to US$63.66.
Both contracts gained more than 1 per cent in the previous session. Brent gained 2.9 per cent this week while WTI rose 1.4 per cent.
“Everyone is waiting for President Trump’s next step,” said UBS commodity analyst Giovanni Staunovo. “Over the coming days, it seems nothing will happen,” he added.
US President Donald Trump said on Friday that he will see if Russian President Vladimir Putin and Ukraine President Volodymyr Zelensky will work together in ending Russia’s war in Ukraine.
“There is still uncertainty around the potential ceasefire, the negotiations are not going as quick as the market would have hoped,” said Phil Flynn, senior analyst with Price Futures Group.
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The 3½-year war continued unabated this week as Russia launched an air attack on Thursday near Ukraine’s border with the European Union, and Ukraine said that it hit a Russian oil refinery and the Unecha oil pumping station, a critical part of Russia’s Europe-bound Druzhba oil pipeline.
Russian oil supplies to Hungary and Slovakia could be suspended for at least five days.
Trump is seeking to arrange a summit between Putin and his Ukrainian counterpart Zelensky as part of efforts to broker a peace deal for Ukraine.
Russian Foreign Minister Sergei Lavrov said that there is no agenda for a potential summit between Putin and Zelensky, accusing Zelensky of saying “no to everything”.
The less likely a ceasefire looks, the more likely the risk of tougher US sanctions on Russia, ING analysts said in a client note on Friday.
Meanwhile, US and European planners have presented military options to their national security advisers after the first in-person meeting between the US and Russian leaders since Russia invaded Ukraine.
Estonia is ready to participate in a peacekeeping operation in Ukraine with a force of up to one battalion, the Baltic country’s Prime Minister Kristen Michal said at a press conference with his Finnish counterpart in Tallinn on Friday.
Putin demanded that Ukraine give up all of the eastern Donbas region, renounce Nato ambitions and keep Western troops out of the country, sources told Reuters.
Trump pledged to protect Ukraine under any war-ending deal and Zelensky dismissed the idea of withdrawing from internationally recognised Ukrainian land.
Larger than expected fall in US oil stocks
Oil prices were also supported by a larger-than-expected drawdown from US crude stockpiles in the past week, indicating strong demand.
Stocks fell by six million barrels in the week ended Aug 15, the US Energy Information Administration said on Wednesday. Analysts had expected a draw of 1.8 million barrels.
Meanwhile, US energy firms this week cut the number of oil and natural gas rigs operating for the fourth time in five weeks, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by one to 538 in the week to Aug 22, the lowest since mid-July.
Weak economic data from Germany on Friday partially offset the stocks draw, showing that Europe’s largest economy shrank by 0.3 per cent in the second quarter, raising concerns over oil demand.
Investors were also looking to the Jackson Hole economic conference in Wyoming for signals of a Federal Reserve interest rate cut next month.
Federal Reserve chair Jerome Powell on Friday pointed to a possible interest rate cut at the US central bank’s meeting next month but stopped short of committing to it, in remarks acknowledging both the growing risks to the job market and the ongoing threat of higher inflation.
Lower interest rates can stimulate economic growth and increase oil demand, potentially boosting prices. REUTERS
