Oil Output: Oil prices were influenced by the potential for a peace deal between Russia and Ukraine, which could lead to the lifting of sanctions on Russia and increase its oil supply to the market. Russia, the third-largest oil producer, is part of the OPEC+ alliance, which also includes Saudi Arabia and other allied countries. In Iraq, BP signed a deal to redevelop oil fields in Kirkuk, and Iraq is awaiting Turkey's approval to resume oil flows from the Kurdish region. Nigeria's oil production increased to 1.8 million barrels per day, up from 1 million barrels per day a year ago. In the U.S., President Trump expressed support for building the Keystone XL pipeline and easing regulatory approvals to move Canadian crude to the U.S.
API: The American Petroleum Institute (API) estimated a crude oil draw of 640,000 barrels, a distillate drawdown of 1.11 million barrels, and a gasoline build of 537,000 barrels. While, a Reuters poll predicted a larger crude build of 2.605 million barrels, along with a distillate draw of 1.488 million barrels and a gasoline draw of 849,000 barrels. The Department of Energy (DOE) releases their weekly inventory report at 9:30 am CST, and should be a market driver in the near term.
Russian Drones: Russia launched nearly 200 drone strikes on Ukraine overnight, primarily targeting the Kyiv region and energy facilities in the east, resulting in two deaths. Ukraine's air defenses intercepted 110 of the 177 drones, while electronic warfare led to the loss of 66 others. The attack damaged an energy facility in Dnipropetrovsk and caused fires in Kyiv, where one civilian died in a house fire. The strikes also affected Kharkiv, Kirovohrad, and Sumy regions. Despite Russia's claim of avoiding civilian targets, the ongoing conflict has led to thousands of civilian casualties, mostly in Ukraine.
Market Overview: Oil prices remained at two-month lows on Wednesday, influenced by the potential for a peace deal between Russia and Ukraine, which could ease supply uncertainty. U.S. West Texas Intermediate crude futures dropped by 13 cents to $68.80, though a decline in U.S. crude stockpiles provided some support. ING analysts noted that improving peace prospects could lead to lifted Russian sanctions, which would further stabilize the market. However, concerns over U.S. President Donald Trump's policies, including higher oil exports from Iraq and potential trade wars, have increased downside risks for oil prices.
In 2025, U.S. electricity generators plan to retire 12.3 gigawatts (GW) of capacity, marking a 65% increase from 2024. This follows a 2024 retirement of 7.5 GW, the lowest since 2011. The majority of planned retirements come from coal, with 8.1 GW set to be retired, representing 4.7% of the total coal fleet. Coal retirements in 2024 were lower at 4.0 GW, a decrease from previous years. Natural gas retirements are also significant, with 2.6 GW expected, mainly from old, less efficient simple-cycle plants. Additionally, 1.6 GW of petroleum-fired capacity is scheduled for retirement, including notable plants like the Herbert A Wagner power plant in Maryland.
Oil prices dropped to two-month lows following an unexpected increase in U.S. fuel stockpiles, suggesting weaker demand, and ongoing concerns about a potential peace agreement between Russia and Ukraine. U.S. West Texas Intermediate crude fell by 0.45% to $68.62, while gasoline and distillate inventories saw unexpected gains, despite a decrease in crude oil stockpiles. The possibility of a peace deal between Russia and Ukraine could ease market uncertainty over Russian sanctions, which may impact global oil supply. U.S. President Trump's policies, including support for increased oil exports from Iraq, could dampen oil prices and trigger a trade war, potentially slowing economic growth.
