Crude oil prices were on the rise, maintaining momentum for another week of gains despite challenges stemming from geopolitics and the latest U.S. inventory data.
The increase in prices came even as the U.S. Energy Information Administration (EIA) reported a rise in crude oil stocks for the second week of February, alongside a decrease in fuel inventories as the refinery maintenance season takes hold.
In the geopolitical arena, oil prices faced some downward pressure due to ongoing U.S.-Russia talks, which have been described as productive. Discussions between the two nations have raised hopes for a potential peace agreement, which could lead to the easing of sanctions on Russia. Analysts warn that such a scenario would likely be bearish for oil prices, as it would open the door for more Russian oil exports to global markets.
This potential shift aligns with former President Trump’s campaign promise of lowering gas prices, but it contradicts Russia’s interests as a member of the OPEC+ coalition. Meanwhile, Ukrainian President Volodymyr Zelensky expressed strong opposition to the peace talks, a development that has created uncertainty among oil traders about the possibility of peace.
Toshitaka Tazawa, an analyst at Fujitomi Securities, commented, “Expectations for a potential peace deal between Russia and Ukraine, which could ease sanctions on Moscow, have faded somewhat due to Ukraine’s hardened stance, prompting some investors to buy back into the market.”
Analysts from the Royal Bank of Canada also suggested that crude prices are likely to remain within a range, driven by ongoing developments in the geopolitical situation. They noted that, as time passes without a significant market catalyst, traders will likely focus on the broader range of prices.
An additional factor influencing oil prices this week came from Ukraine’s attack on a compressor station for the Caspian Pipeline Consortium (CPC), which disrupted the flow of Kazakh oil to global markets. Russian sources reported a 30% to 40% drop in oil flow along the CPC pipeline on Tuesday following the attack.
While geopolitical tensions and inventory data continue to impact crude prices, the market remains volatile, and traders are closely monitoring developments for further price movements.
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