Oil prices moved lower on Thursday as traders focused on ongoing Russia-Ukraine peace negotiations and the continued buildup of U.S. fuel inventories. Brent settled at $61.28, down $0.93 (-1.49%), while WTI finished at $57.60, down $0.86 (-1.47%). Both benchmarks spent much of the session down nearly 2%, returning to levels last seen in October.
Weakness in the physical market was a major drag. U.S. gasoline and distillate inventories each rose by roughly 2.5 million barrels last week, extending a trend of oversupply and eroding refining margins. Analysts noted that surplus product stocks remain one of the heaviest headwinds for crude prices.
Geopolitics also leaned bearish. Hopes that Russia and Ukraine may be edging closer toward a negotiated framework added pressure, as any agreement could ultimately reopen flows of Russian oil currently restricted by sanctions. Officials from the U.S., Britain, France, and Germany held a coordinated call this week discussing the diplomatic push, which they described as a critical stage in the process. Moscow said U.S. envoy Steve Witkoff’s recent visit helped resolve “misunderstandings,” though major gaps remain.
Ukraine continued targeting Russian energy assets, striking a Caspian Sea offshore platform and halting its output — a first for that region. The incident offered brief intraday support, but the broader narrative around potential peace progress overshadowed it.
Separately, tensions between the U.S. and Venezuela lingered after Washington seized a tanker believed to be operating near the Venezuelan coast. While the action has not yet impacted flows, analysts warned that further escalation could jolt heavy-crude pricing. Buyers in Asia were already demanding steep discounts for Venezuelan barrels amid an influx of sanctioned Russian and Iranian crude and heightened loading risks in the Caribbean.
On the macro front, the International Energy Agency adjusted its outlook, raising its 2026 demand projections while trimming supply growth expectations. The revisions point to a slightly narrower surplus next year, but the market remains concerned about the near-term glut in refined products and the potential return of additional Russian barrels.