Oil Holds Two-Day Gain With Focus on Ukraine Talks and Surplus

(Bloomberg) — Oil held a two-day advance as investors weighed the next steps for talks on a ceasefire in Ukraine, and signs of a swelling surplus.

West Texas Intermediate traded near $60 a barrel after closing 1.2% higher on Thursday. Brent settled above $63. Ukrainian negotiators will join a new round of discussions in Florida, while Russian President Vladimir Putin said some of the points in a US-backed peace plan were unacceptable to him.

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The market is watching for progress on a deal, which could potentially lead to sanctions being lifted on Russia and more oil exports, though reaching an actual agreement appears distant at this stage. Additional supply would likely weigh on prices, which are already on track for a hefty annual loss on glut concerns.

Oversupply is putting pressure on prices globally: Saudi Aramco will reduce the price of its flagship Arab Light crude grade to the lowest level since 2021 for January, while Canadian oil has tumbled.

The “bearish trend is likely to resume, because fundamentally, crude is in a state of oversupply,” said Zhou Mi, an analyst at a research institute affiliated with Chaos Ternary Futures Co. The talks on Ukraine and US rhetoric against Venezuela are “market noise,” he added.

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