Oil drops on Russia and Ukraine talks, US stockpile data

Oil storage containers are seen amid the coronavirus (COVID-19) pandemic, in Los Angeles, California, US, April 7, 2021. REUTERS/LUCY NICHOLSON/FILES

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  • Russia says some deals with Ukraine are on the verge of agreement
  • New locally transmitted COVID-19 cases in China nearly halved
  • The International Energy Agency cuts its forecast for oil demand growth in 2022
  • EIA figures show a bigger than expected bump in stocks

(Reuters) – Oil fell on Wednesday in another volatile session as traders reacted to the hoped-for progress in peace talks between Russia and Ukraine and a sudden increase in US inventories.

Around noon in New York, global benchmark Brent crude was slightly lower and US crude rose slightly.

The oil market has been in a deep recession for more than two weeks, trading in wide ranges of several dollars a day.

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On Wednesday, the global benchmark Brent crude price ranged between $97.55 and $103.70 and fell $1.41 to $98.50 a barrel as of 1:21 PM ET (1721 GMT). US West Texas Intermediate crude lost 54 cents to $95.87 a barrel.

Last week’s frenetic rally pushed Brent to briefly surpass $139 a barrel on fears of an extended disruption to Russian supplies. Now, the streak of selling has sent prices down a lot, but some analysts cautioned that this reflects a lot of optimism that the war will soon be over.

“We live from the headlines to the headlines here,” said Robert Yauger, director of energy futures at Mizuho.

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The United States and other countries have imposed severe sanctions on Russia since it invaded Ukraine more than two weeks ago. This has disrupted the Russian oil trade of more than 4-5 million barrels of crude oil per day.

Brent crude was up 28% in six days, then fell by 24% over the next six sessions from Wednesday. A number of factors led to this shift, including modest hopes for a peace deal between Russia and Ukraine and weak signs of progress between the United States and Iran to revive a 2015 agreement that would allow the Islamic Republic to export oil if it agreed to limit its nuclear program. ambitions.

In addition, Chinese demand is expected to slow due to an increase in coronavirus cases there, although the numbers showed fewer new cases and Chinese stimulus hopes boosted stocks.

The International Energy Agency (IEA) said three million barrels per day of Russian oil and products may not find their way to the market from April, given the impact of sanctions and delaying buyers.

“These losses could deepen in the event of an acceleration of embargoes or public oversight,” the Paris-based International Energy Agency said in a report that also showed a decline in its forecast for oil demand for 2022.

US stocks rose by 4.3 million barrels, against expectations of a loss, while stocks in the Cushing Center, Oklahoma, also rose, easing a bit of concern about the low level of stocks there.

Crude oil settled below $100 on Tuesday, the first time since late February. Prices hit a 14-year high on March 7.

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Later on Wednesday, the Federal Reserve is expected to raise US interest rates for the first time in three years and provide guidance on tightening ahead. Investors expect the central bank to raise interest rates by at least 25 basis points.

Signs of progress in peace talks between Russia and Ukraine added to the bearish tone. The Ukrainian president said that the positions of Ukraine and Russia seemed more realistic, but time was required. Russia’s foreign minister said some deals with Ukraine are on the verge of agreement. Read more

“Fears of supply disruptions have eased due to tentative signs of progress in ceasefire talks between Russia and Ukraine,” said Stephen Brennock of BVM oil brokerage.

“However, an end to hostilities still seems a long way off.”

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Additional reporting by Emily Chow. Editing by Barbara Lewis, Louise Heavens, David Gregorio and Tim Ahmann

Our criteria: Thomson Reuters Trust Principles.

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