As US crude inventories rise, oil prices fall; Russia-Ukraine peace negotiations weigh

Oil prices fell in Asian trading on Thursday after a one-week high, dragged by an unexpected increase in {{8849|U.S. crcrude oil inventories and ongoing geopolitical developments concerning potential peace negotiations between Russia and Ukraine.

Brent Oil Futures fell 0.3% to $75.83 per barrel as of 20:53 ET (01:53 GMT), while Crude Oil WTI Futures declined 0.4% to $71.82 per barrel.

On the geopolitical front, high-level discussions between U.S. and Russian officials commenced in Saudi Arabia, aiming to negotiate an end to the ongoing conflict in Ukraine.

Notably, these talks have proceeded without direct involvement from Ukrainian representatives, leading to international debate regarding the legitimacy and potential outcomes of such negotiations. 

A successful peace agreement could result in the lifting of sanctions on Russian oil exports, thereby increasing global oil supply and exerting additional downward pressure on prices.

US crude inventories jump, signals weak demand - API

The American Petroleum Institute (API) reported a 3.34 million barrel increase in U.S. crude oil inventories for the week ending February 14, surpassing analysts' expectations of a 2.2 million barrel rise.

In contrast, gasoline inventories experienced a build of 2.83 million barrels, while distillate stocks, including diesel and heating oil, decreased by 2.69 million barrels during the same period.

These inventory changes suggest a complex supply-demand dynamic in the U.S. oil market, with rising crude and gasoline stocks potentially indicating softer demand or increased production, while the drawdown in distillate stocks may reflect higher consumption or export activity.

Market participants will closely monitor the upcoming U.S. Energy Information Administration (EIA) report for further insights into these trends. 

Supply disruption concerns limit losses

Prices were supported this week after Ukrainian drone strikes targeted a key Russian crude-pumping station, disrupting supply from Kazakhstan. 

The attack reignited fears of further supply disruptions in a market already grappling with tight inventories. 

In the U.S., cold weather has also put pressure on supplies. The North Dakota Pipeline Authority reported that the state's production is expected to drop by 150,000 barrels per day.

Adding to the supply concerns, media reports showed that OPEC+ may delay increasing supply to the market.

“Concerns over the fragility of the market leaves OPEC+ reluctant to increase supply. A delay could wipe out the surplus we expect for the market this year, which would leave prices better supported,” ING analysts said in a recent note.