Oil Prices Drop as U.S. Crude Supplies Rise for Third Week; Trump-Putin Talks Could Impact Market

Market Drivers

1. Trump-Putin Peace Talks
President Trump stated on Wednesday that he had a “highly productive” conversation with Russian President Vladimir Putin and that both leaders are open to immediate peace talks to end the war in Ukraine. The announcement eased fears of further disruptions in Russian crude supplies.

According to Tyler Richey, co-editor at Sevens Report Research, a potential ceasefire or end to the war could drive oil prices lower. Trump’s efforts to push for the removal of Russian energy sanctions would increase global oil supply, reducing price pressures.

Manish Raj, managing director at Velandera Energy Partners, emphasized that a peace deal would immediately release stranded Russian oil into global markets, potentially flooding the market with new supply.

2. Federal Reserve Policy
Crude prices were also influenced by the Federal Reserve’s hawkish stance, despite Trump’s call for interest rate cuts to stimulate investment. Fed Chair Jerome Powell indicated that while the U.S. economy remains strong, the central bank is prepared to act if inflation decreases faster than expected or if the labor market shows signs of weakness.

3. U.S. Supply and Demand
The Energy Information Administration (EIA) reported a third consecutive weekly increase in U.S. commercial crude inventories, with a rise of 4.1 million barrels for the week ending Feb. 7. Analysts had expected a larger increase of 4.5 million barrels, while the American Petroleum Institute (API) reported a more significant rise of 9.04 million barrels.

• Gasoline inventories fell by 3 million barrels, surpassing expectations of a 1.3 million-barrel increase.
• Distillate inventories edged up by 100,000 barrels, compared to a forecast decline of 1.6 million barrels.

Gasoline demand showed signs of improvement, with total finished motor gasoline supplied rising to 8.576 million barrels per day, compared to 8.328 million bpd the previous week.

Global Demand Outlook

The Organization of the Petroleum Exporting Countries (OPEC) released its monthly report, maintaining its forecast for global crude demand growth at 1.4 million barrels per day for 2025 and 2026. Total world demand is projected at 105.20 million bpd for 2025 and 106.63 million bpd for 2026.

The combination of rising U.S. crude inventories, potential peace talks between Russia and Ukraine, and ongoing Federal Reserve policy decisions continues to shape the oil market. While short-term volatility may persist, the long-term demand outlook remains steady, with OPEC projecting continued growth in global consumption.