By Gina Lee
Investing.com – Oil was up on Wednesday morning in Asia, reversing the previous session’s losses as hopes rose for progress in peace talks between Russia and Ukraine. The latest U.S. crude oil supply data was also a stark reminder of the tight supply in the market.
Brent oil futures gained 0.53% to $108.28 by 1:20 PM ET (5:20 AM GMT), reversing the 2% loss from the previous session. WTI futures rose 0.67% to $104.94, erasing Tuesday’s 1.6% drop.
Investors’ focus was on supply tightness, with Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showing a draw of 3 million for the week ended Mar. 25. Forecasts prepared by Investing.com predicted a draw of 1.558 million barrels, while a 4.28-million-barrel draw was recorded during the previous week.
Investors await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
The market fell about 2% during the previous session, with Russia pledging to scale down military operations around Kyiv and another city during face-to-face peace talks. The move comes more than a month after the Russian invasion of Ukraine on Feb. 24 but reports of attacks also continue.
Ukrainian President Volodymyr Zelenskiy also said there were promising signs from the talks, but he was looking for concrete results. "We can say the signals we are receiving from the talks are positive, but they do not drown out the explosions of Russian shells," he said in a late-night address.
“The price recovery suggests the oil market, at least, has a strong degree of skepticism about any ‘progress’," Commonwealth Bank analyst Tobin Gorey said in a note.
Investors are also looking to the Organization of the Petroleum Exporting Countries and allies (OPEC+)’s next meeting, scheduled for Thursday. Major oil producers are unlikely to raise output above the agreed 400,000 barrels per day level, several sources close to the cartel told Reuters, contributing to an already tight market.
Saudi Arabia and the United Arab Emirates, both key OPEC+ members, said the group would not seek to take action against Russia for its invasion of Ukraine. OPEC+ will only stabilize the market and not engage in politics, they added.