Oil Prices Drop: Supply Glut & Ukraine Peace Hopes

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Febuary 29, 2024 – 14:35 GMT

• Brent crude futures fell $1.68, or 2.06%, to $80.04 a barrel by 1435 GMT.
• U.S. West texas Intermediate (WTI) crude dropped $1.72, or 2.18%, to $77.23 a barrel.
• The Energy Details Administration (EIA) reported a larger-than-expected build in U.S. crude inventories.
• Talks between Russia and Ukraine are reportedly showing some signs of progress, raising hopes for a ceasefire.

Brent crude futures settled at $80.04 a barrel, a 2.06% decrease, by 1435 GMT.Simultaneously, U.S. West Texas Intermediate (WTI) crude saw a 2.18% drop,closing at $77.23 a barrel. The downward pressure stemmed from two primary factors: a build-up in U.S. oil inventories and renewed optimism regarding peace talks between Russia and Ukraine.

U.S. inventory Build Adds to Supply Concerns

The U.S. Energy Information Administration (EIA) reported that crude oil inventories increased by 5.5 million barrels last week, exceeding analysts’ expectations. This unexpected surge in supply fueled concerns about a potential glut in the market, prompting investors to offload their positions. A larger-than-expected inventory build typically signals weakening demand or increased production, both of which can push prices lower.

What factors influence oil prices? Oil prices are influenced by a complex interplay of factors, including global demand, supply levels, geopolitical events, and economic conditions.

Ukraine Peace Talks Offer a Ray of Hope

adding to the downward pressure, reports emerged suggesting that discussions between Russia and Ukraine where showing tentative signs of progress. While details remain scarce, any indication of a potential ceasefire or diplomatic resolution tends to ease concerns about supply disruptions, leading to lower oil prices. The conflict in Ukraine has been