Oil prices experienced a modest increase during Asian trading on Thursday, bolstered by renewed strikes on Russian oil infrastructure and the stagnation in diplomatic efforts aimed at resolving the conflict in Ukraine. As of 22:53, Brent Oil Futures expiring in February increased by 0.4% to $62.89 per barrel, while West Texas Intermediate crude futures saw a rise of 0.5% to $59.23 per barrel. A report on Wednesday, referencing sources, indicated that Ukrainian forces targeted the Druzhba pipeline located in Russia’s central Tambov region. The action has reignited apprehensions regarding possible interruptions to Russian oil exports. Simultaneously, high-level peace negotiations between U.S. and Russian officials ended on Tuesday without any significant progress, dampening expectations that sanctions on Russian oil could be relaxed and leaving markets prepared for ongoing geopolitical uncertainty.

However, the optimistic outlook encountered challenges due to the U.S. inventory data. The report indicated that U.S. crude inventories increased by 574,000 barrels for the week ending November 28, contrary to the anticipated draw of 1.9 million barrels. Inventories of gasoline and distillates experienced a significant increase, with gasoline rising by 4.52 million barrels and distillates increasing by 2.1 million barrels. The concurrent increase in crude and refined products highlights persistent demand weakness in the world’s largest oil consumer, thus counterbalancing much of the risk-driven price support.

Market participants have increased their anticipations regarding a potential reduction in interest rates by the Federal Reserve at the forthcoming policy meeting, with current pricing reflecting approximately a 90% probability of a 25-basis-point decrease. Expectations of rate cuts bolster oil prices by diminishing the strength of the dollar and enhancing economic activity, which collectively elevate global fuel demand. Easing bets persisted following a disappointing reading from the private sector labor market. ADP reported that U.S. private payrolls contracted by 32,000 in November — an unexpected decline following a revised increase in the previous month and significantly below the consensus forecast among economists for a rise.

In the interim, the Institute for Supply Management services index for November registered at 52.6, marking its highest level in nine months. Concurrently, the underlying price measures showed a decline, suggesting a more favorable inflation environment.