Oil Sinks 2% After Trump Calls Putin, Zelenskiy to Discuss End to War in Ukraine
Oil prices settled down more than 2% on Wednesday after U.S. President Donald Trump took the first big step toward diplomacy over the war in Ukraine he has promised to end, a war that has supported oil prices on concerns about global supplies.
Brent futures settled down $1.82, or 2.36%, at $75.18 a barrel. U.S. West Texas Intermediate (WTI) crude settled down $1.95, or 2.66%, to $71.37.
U.S. crude futures fell more than $2 at their session low. The declines follow three days of gains, during which Brent climbed 3.6% and WTI rose 3.7%.
U.S. President Donald Trump discussed the war in Ukraine in phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy.
"Trump doing peace talks, I think that has taken some of the risk premium out of oil prices right now," said Phil Flynn, senior analyst with Price Futures Group.
In a post on his social media platform, Trump said he and Putin had "agreed to have our respective teams start negotiations immediately, and we will begin by calling President Zelenskiy, of Ukraine, to inform him of the conversation, something which I will be doing right now."
Zelenskiy's office said Trump and Zelenskiy had spoken by phone for about an hour.
Investors also tried to gauge the Federal Reserve's next moves on cutting interest rates following comments on Tuesday by Fed Chair Jerome Powell and after data on Wednesday showed U.S. consumer prices increased more than expected in January.
"The combination of higher inflation and the possibility of peace (in Ukraine) is causing a bit of a sell off in the market at the moment," said Price Futures Group's Flynn.
Powell said the economy is in a good place and the Fed is not rushing to cut rates further, but is prepared to do so if inflation drops or the job market weakens.
Consumer price data released by the U.S. Labor Department showed surprisingly strong U.S. inflation in January, stoking fears that a heating economy and looming tariffs could undercut hopes for rate cuts. Higher rates can slow economic activity and dampen demand for oil.
Source : Reuters
