Oil prices held largely steady on Friday as waning prospects for an immediate Russia-Ukraine peace deal pushed up the risk premium in the market, setting crude up to break a two-week losing streak.
Brent crude futures slipped 0.01 percent to $67.66 a barrel at 5:00 GMT, while U.S. West Texas Intermediate (WTI) eased 0.02 percent to $63.51. Both contracts climbed more than 1 percent in the previous session. Brent has risen 2.7 percent this week, while the WTI has gained 1.1 percent.
Hopes for Russia-Ukraine peace deal fade
Traders are factoring in greater risk as hopes fade that U.S. President Donald Trump can swiftly broker a Russia-Ukraine peace deal, the absence of which has fueled oil prices’ recent two-week slide. Efforts to arrange a Putin-Zelenskiy summit remain stalled, and talks on possible security guarantees face hurdles. The slimmer the chances of a ceasefire, the higher the likelihood of tougher U.S. sanctions on Moscow.
The three-and-a-half-year war showed no signs of easing on Thursday, with Russia carrying out an airstrike near Ukraine’s EU border and Kyiv reporting a strike on a Russian oil refinery. At the same time, U.S. and European officials said allied security advisers have drawn up new military options.
The developments came after the weekend’s first in-person meeting between U.S. and Russian leaders since the invasion, which produced little progress toward peace.
Russian President Vladimir Putin has demanded that Ukraine cede the entire eastern Donbas region, abandon its NATO aspirations, and bar Western troops from its territory, according to sources familiar with the matter. Meanwhile, Trump has vowed to guarantee Ukraine’s security under any potential peace deal, and Ukrainian President Volodymyr Zelenskiy rejected surrendering internationally recognized land.
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Oil prices were also supported by a larger-than-expected decline in U.S. crude stockpiles last week, indicating strong demand. U.S. crude inventories fell by 6 million barrels last week to 420.7 million, the Energy Information Administration (EIA) said on Wednesday, far exceeding analysts’ expectations for a 1.8 million-barrel draw.
Gasoline stocks declined by 2.7 million barrels, compared with forecasts for a 915,000-barrel drop, reflecting steady driving demand during the summer travel season. The EIA also reported that the four-week average of jet fuel consumption rose to its highest level since 2019.
Investors also turned their attention to the Jackson Hole economic symposium in Wyoming for clues on a possible Federal Reserve rate cut next month. The annual meeting of central bankers opened on Thursday, with Fed Chair Jerome Powell set to speak on Friday. A rate reduction could spur economic growth and lift oil demand, providing further support for prices.