Oil prices extend sharp gains on US inventory decline

Investing.com-- Oil prices extended sharp gains in Asian trading on Thursday, buoyed by a bigger-than-expected drop in U.S. crude stockpiles, while traders weighed prospects of a possible Russia-Ukraine peace initiative to gauge supply outlook.

As of 21:52 ET (01:52 GMT), Brent Oil Futures expiring in October rose 0.5% to $67.20 per barrel, while West Texas Intermediate (WTI) crude futures climbed 0.6% to $63.11 per barrel.

US crude stockpiles drop more than expected - EIA

Brent oil contracts surged nearly 2% on Wednesday after the U.S. Energy Information Administration’s (EIA) weekly report.

It showed a much sharper-than-expected draw in crude inventories, with stockpiles falling by about 6 million barrels versus forecasts for a 1.8 million-barrel decline.

The decline, driven by a surge in exports and steady refinery runs, signalled tightening supply and robust demand, which provided a clear boost to oil market sentiment.

Gasoline inventories also fell more than expected, down 2.7 million barrels, highlighting strong summer driving demand. Refinery utilization climbed to 96.6%, underlining strong processing activity.

Traders viewed the deep inventory draw and firm product demand as confirmation that U.S. fuel consumption remains resilient, helping offset some concerns about global economic uncertainty.

Earlier this week, the American Petroleum Institute also reported that U.S. crude oil stocks fell by 2.4 million barrels in the week ending August 15.

Traders await potential Russia-Ukraine talks

President Donald Trump said on Tuesday that he spoke with Russian President Vladimir Putin after hosting Ukrainian President Volodymyr Zelenskiy and European leaders at the White House on Monday.

Trump has said that he was arranging a meeting between Moscow and Kyiv, followed by a potential trilateral summit involving the United States.

Traders are watching closely for any sign that a peace framework could lead to easing of Western sanctions on Russian crude exports.

Russia remains one of the world’s top oil suppliers, but sanctions have capped some flows into Western markets since the invasion of Ukraine.