Oil prices stabilized on Wednesday as investors watched for movement in Russia-Ukraine peace talks and awaited a decision on U.S. interest rates.
After declines of about 1% in the previous session, Brent crude was up seven cents, or 0.1%, at $62.01 a barrel U.S. while U.S. West Texas Intermediate crude gained 10 cents, or 0.2%, to $58.35.
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 seven million barrels and distillate inventories swelled by 1.03 million barrels. Government data is due later this morning. Meanwhile, markets were expecting the U.S. Federal Reserve to reduce its main interest rate by a quarter of a point on Wednesday to support a cooling labour market.
Lower interest rates could lift oil demand by boosting economic growth, but gains were capped by concern that supply could outpace demand. While the oil market is moving deeper into an expected glut, Russian supply remains a risk, ING analysts said in a note. 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.
A peace deal between the long-standing enemies 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 this year to climb higher than previously expected, raising its 2025 forecast by 20,000 barrels to average a record 13.61 million barrels per day.
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