Oil Edges Up Amid Ukraine Peace Hopes, but Oversupply Fears Limit Gains

Global crude prices inched higher Monday, driven by renewed speculation over diplomatic progress in the Ukraine conflict, though gains were checked by persistent concerns over oversupply. Brent crude futures settled at $87.30 per barrel, up $0.52, while WTI futures advanced to $84.15, a gain of $0.42. The movement followed a weekend of indirect signaling from European officials suggesting a potential breakthrough in negotiations between Kyiv and Moscow, which has bolstered market confidence in a de-escalation scenario. Despite the positive sentiment, supply dynamics weighed heavily on the market. Data from the U.S. Energy Information Administration indicated that crude inventories rose by 2.1 million barrels last week, exceeding analysts’ expectations of a 1.2 million-barrel increase. Total commercial stockpiles now stand at 487.3 million barrels, near the upper end of the seasonal range. Analysts note that elevated inventory levels, combined with stable OPEC+ output and strong U.S. shale production, have created a structural surplus that limits the room for price appreciation. The impact extended beyond crude, affecting refined products. Heating oil futures (HO=F) rose 0.3% to $2.88 per gallon, reflecting seasonal demand support, while gasoline futures edged up 0.2% to $2.94. The U.S. Oil ETF (USO) gained 0.4% on the session, tracking the broader energy sector’s modest rebound. Energy traders remain cautious, balancing geopolitical developments with fundamental supply pressures. Market participants are now watching for the next OPEC+ meeting, scheduled for early January, where production adjustments could shape sentiment. With geopolitical risks and supply fundamentals in tension, volatility is expected to persist in the coming weeks.