Oil prices rise as Russia-Ukraine ceasefire talks fuel trade turbulence

Oil prices gained early Wednesday, regaining ground after plunging more than $1 per barrel earlier in the day, as Russia’s invasion of Ukraine continued to dominate turbulent trade, with ceasefire negotiations the latest market trigger.

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Brent futures were up 83 cents, or 0.8%, at $100.74 a barrel. West Texas Intermediate (WTI) crude in the United States increased 58 cents, or 0.6%, to $97.02 per barrel. Both prices had dropped more than $1 earlier, with Brent sliding to $98.86 a barrel and WTI falling to $94.90 a barrel. 

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In a video speech aired early Wednesday, Ukrainian President Volodymyr Zelensky stated that the stances of Ukraine and Russia in peace negotiations were sounding more reasonable, but that more time was required.

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“Traders are awaiting more clues from ceasefire talks after a two-day selloff in the oil markets, but the crude prices may continue being under pressure as high inflation will eventually drag on economic growth and weakens demands,” said Tina Teng, an analyst at CMC Markets.

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On Tuesday, oil fell below $100 for the first time since late February. Since Russia invaded Ukraine on February 24, trading sessions have been volatile, with prices reaching 14-year highs on March 7, but Brent has plummeted over $40 a barrel and WTI has fallen approximately $34.

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Prices have also fallen in recent days as a result of fears about decreasing Chinese demand as the world’s most populous country and second-largest oil user applies strict restrictions to stop the spread of COVID-19.

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Meanwhile, preliminary data from the American Petroleum Institute showed that crude inventories in the United States increased by 3.8 million barrels for the week ending March 11, while gasoline inventories decreased by 3.8 million barrels and distillate stocks increased by 888,000 barrels, as per Reuters. The official inventory data from the United States government is due on Wednesday.