DTN Oil Update
Oil Prices Drop on Ukraine Peace Deal Reports
VIENNA (DTN) -- Crude futures tumbled Tuesday, Nov. 25, morning on media reports that Ukraine supports the essence of a framework for peace with Russia drawn up by the United States.
The reports appeared to accelerate the odds of the near four-year Ukraine-Russia war ending soon and for sanctioned Russian oil to officially re-enter an oversupplied global market.
The NYMEX WTI contract for January delivery fell $1.12 bbl to $57.72 bbl, and ICE Brent for January delivery dropped $1.22 to $62.15 bbl.
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December RBOB gasoline futures retreated $0.0243 to $1.8723 gallon, and front-month ULSD futures tumbled $0.0457 to $2.3604 gallon.
The U.S. Dollar Index softened by 0.127 points to 99.945 against a basket of foreign currencies.
Monday's media reports on the Ukraine-Russia peace process contained varying language.
ABC News on Tuesday reported that a U.S. official said Ukraine had "agreed to a peace deal." The report contradicted earlier statements from Ukrainian officials who in the past week had largely rejected the terms of the U.S. proposal.
A Ukrainian official said in another report that the country supports the essence of the framework in the U.S. peace initiative unveiled in Geneva last week. The most sensitive issues of framework will be discussed between Ukrainian President Volodymyr Zelenskyy and U.S. President Donald Trump, the official said.
It was also unclear whether Russia will accept the outcome of U.S. and Ukrainian discussions on the matter.
Oil futures extended losses from last week amid concerns about the repealing of sanctions on Russia should the peace deal go ahead.
While the end of Ukrainian strikes on Russian downstream infrastructure would take pressure of a tight global middle distillate market, it would be a different story with crude market which was already seen oversupplied as of the third quarter. OPEC projected a 500,000-bpd crude surplus for the quarter, reversing the 400,000-bpd deficit it forecasted in October. The International Energy Agency has, meanwhile, forecasted a 4.09 million bpd global oversupply for 2026, versus a prior 3.97 million bpd.
Separately, the Energy Information Administration estimated that U.S. crude production hit a record-high 13.76 million bpd in the third quarter.