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WTI price tumbles to near $56.50 in Friday’s early European session.
Trump and Putin agreed to meet in Hungary to discuss ending the war in Ukraine.
US crude inventories rose by 3.524 million barrels last week, the EIA said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $56.50 during the early European trading hours on Friday. The WTI remains on the defensive amid uncertainty over global energy supplies and a bigger-than-forecast crude inventory build.
US President Donald Trump said that he and Russian President Vladimir Putin agreed to meet in Budapest, Hungary, to discuss how to end Russia’s war in Ukraine, CNBC reported late Thursday. The call came a day before Ukrainian President Volodymyr Zelenskyy is set to meet with Trump at the White House, as Kyiv seeks more US support in its war against Russia.
The potential of peace talks between Trump and Putin signals a potential de-escalation of the Russia–Ukraine conflict, which drags the WTI price lower. "Concerns of tighter supplies were eased after it was announced that Trump would be meeting with Putin to discuss ending the war in Ukraine," said Daniel Hynes, an analyst at ANZ.
A larger-than-expected build in US crude oil inventories also weighs on the black gold. Data released by the US Energy Information Administration (EIA) on Thursday showed that crude oil stockpiles in the US for the week ending October 10 climbed by 3.524 million barrels compared to a rise of 3.715 million barrels in the previous week. Analysts estimated that stocks would increase by 120,000 barrels.
Nonetheless, the expectation that the US Federal Reserve (Fed) will deliver another quarter-point rate cut later this month could help limit the WTI’s price losses. Traders are now pricing in nearly a 98% probability of a 25 basis points (bps) rate reduction in October, followed by another easing in December, which is fully priced in, according to Reuters. A Fed rate cut bet generally weakens the US Dollar (USD) and supports the USD-denominated commodity price as a softer USD makes crude cheaper for foreign buyers.
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