Oil prices held steady on Wednesday after falling about 1% in the previous session, as investors watched for progress in Russia-Ukraine peace talks and awaited a decision on U.S. interest rates.
Brent crude futures were up 7 cents, or 0.1%, to $62.01 a barrel at 0500 GMT. U.S. West Texas Intermediate crude was at $58.32 a barrel, up 7 cents, or 0.1%.
“Oil markets are currently struggling for direction as far as we can see, with a minor lift from falling U.S. inventories as reported by API,” said Suvro Sarkar, lead energy analyst at DBS Bank, referring to the American Petroleum Institute.
“Traders will be looking for cues from any breakthroughs or lack thereof in Ukraine peace talks, while the U.S. Fed rate cut policy is another key macro driver that could provide some support for oil prices.”
Market sources, citing API figures, said on Tuesday that U.S. crude inventories fell by 4.78 million barrels last week, while gasoline stocks rose by 7 million barrels and distillate inventories rose by 1.03 million barrels.
Meanwhile, markets were expecting the U.S. Federal Reserve to reduce its key interest rate by a quarter point at its Wednesday meeting to support a cooling labour market. Lower interest rates could lift oil demand by boosting economic growth.
But concerns about supply outpacing demand capped gains. ING analysts said in a note that while the oil market is moving deeper into an expected glut, Russian supply remains a risk.
“While Russian seaborne export volumes are holding up well, these barrels are struggling to find buyers,” ING said, adding that Russian oil output will start to fall if buyers are not found.
Ukrainian President Volodymyr Zelenskiy said his country and its European partners will soon present the U.S. with “refined documents” on a peace plan to end the war with Russia, following days of high-stakes diplomacy.
A peace deal between Ukraine and Russia could bring about the removal of international sanctions on Russian companies, which could free up restricted oil supply.
Meanwhile, the Energy Information Administration said it expects U.S. oil production to hit a larger record this year than previously expected, raising its 2025 forecast by 20,000 to average 13.61 million barrels per day.
The organisation, however, lowered its forecast for total output in 2026 by 50,000 to 13.53 million bpd.
(Reporting by Emily Chow; Editing by Thomas Derpinghaus)