Oil prices reversed earlier losses on Wednesday as investors concluded that the ongoing Russia-Ukraine peace talks are unlikely to result in the swift removal of sanctions on Russian crude, keeping supply restricted. However, gains remained limited due to persistent fears of an overall supply surplus.
Brent crude gained 26 cents (0.4%) to trade at $62.71 per barrel at 0816 GMT. U.S. West Texas Intermediate (WTI) rose 29 cents (0.53%) to $58.95. Both contracts had fallen by more than 1% in the previous session.
A five-hour meeting between Russian President Vladimir Putin and U.S. President Donald Trump's top envoys failed to yield a compromise on a peace deal, according to the Russian government.
Goldman Sachs analysts noted that oil and prediction markets do not anticipate a "large probability of a near-term peace agreement and removal of the sanctions on Russia oil." Accusations from Putin that European powers are obstructing U.S. peace attempts have increased concerns that Russian supply will remain restricted to major buyers like China and India, as a deal to lift sanctions on major oil companies like Rosneft and Lukoil appears distant.
The war is widening, with Ukraine now regularly using drones to strike Russian oil infrastructure, including recent attacks on oil export sites on the Russian Black Sea coast, highlighting ongoing geopolitical risks.
Despite geopolitical worries, market analyst Tony Sycamore noted that "concerns over an oversupply glut and soft demand continue to weigh on the crude oil price," stressing that prices must stay above the mid-$50s to avoid a deeper setback.
Data from the American Petroleum Institute (API) on Tuesday added to surplus concerns, reporting that U.S. crude and fuel inventories rose last week, Crude stocks rose by 2.48 million barrels, Gasoline inventories increased by 3.14 million barrels, Distillate inventories rose by 2.88 million barrels.
The market is now awaiting official government stockpile data from the U.S. Energy Information Administration (EIA) later on Wednesday.
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