WTI crude oil futures experienced a 3% decline, dropping to $59 per barrel on Wednesday. This development followed reports suggesting that the United States is actively seeking to broker a resolution to the Russia-Ukraine conflict. A Ukrainian official indicated that Kyiv has received "signals" of U.S. initiatives aimed at ending the hostilities, fueling optimism for a potential diplomatic breakthrough. Concurrently, Russia has asserted that the sanctions imposed on its energy giants, Rosneft and Lukoil, have not adversely affected its production levels.
On the supply front, U.S. crude oil inventories saw a significant increase of 4.4 million barrels, as reported by the American Petroleum Institute (API). This surge in stockpiles positions them near a five-month high, contingent upon verification by official data. The expanded inventory raises concerns that global supply might surpass demand, with the International Energy Agency (IEA) projecting a record surplus for the coming year. Reflecting the burgeoning supply, last week's data from Vortexa highlighted that crude oil on tankers surged to nearly 1.4 billion barrels, destined for buyers or held in floating storage.
Despite these supply dynamics, geopolitical tensions continue to escalate. Notably, Iran briefly detained a tanker near the strategically crucial Strait of Hormuz, while the United States is increasing its military presence near Venezuela.
