West Texas Intermediate (WTI) crude oil edged lower to around $71.10 in early Asian trading on Thursday, as diplomatic developments and economic factors pressured prices. The decline followed reports that U.S. President Donald Trump engaged Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy in phone discussions aimed at ending the war in Ukraine.
Trump stated that he and Putin agreed to launch immediate negotiations, with their teams reaching out to Zelenskiy to begin talks. The news dampened the risk premium in oil prices, with Price Futures Group senior analyst Phil Flynn noting, “Trump doing peace talks, I think that has taken some of the risk premium out of oil prices right now.”
Meanwhile, U.S. crude inventories continued their upward trend, adding further pressure on WTI. The Energy Information Administration (EIA) reported a stockpile increase of 4.07 million barrels for the week ending February 7, following an 8.664 million-barrel rise the previous week. The latest figure exceeded market expectations of a 2.8 million-barrel increase, signaling weaker demand.
Additionally, hawkish remarks from Federal Reserve (Fed) Chair Jerome Powell contributed to WTI’s decline. Powell highlighted that while inflation control has progressed, further tightening is necessary, reinforcing expectations that the Fed will not rush to cut interest rates. The prospect of prolonged higher rates and economic resilience weighed on oil market sentiment.
“Oil prices resumed their downtrend as the macro environment weighed on sentiment, with Jerome Powell indicating that the U.S. Fed was not in a rush to lower rates,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
As geopolitical uncertainties ease and economic factors play a larger role, WTI could face continued downward pressure in the near term.
