WASHINGTON (dpa-AFX) - Crude oil ended roughly flat on Wednesday amid prevailing geopolitical risks due to the ongoing U.S.-Venezuela conflict while signals of a ceasefire between Russia-Ukraine surface.
WTI Crude Oil for February delivery was last seen trading up by $0.02 (or 0.03%) at $58.40 per barrel.
The drawn-out Russia-Ukraine war showed some sign of ending soon after Ukrainian President Zelenskyy outlined a new 20-point peace plan formulated jointly by U.S. and Ukrainian officials during their meeting in Florida over the weekend.
The framework allows supplemental bilateral deals between the U.S. and Ukraine that would ensure security guarantee to Ukraine and insulate the country from future foreign attacks. The deals also include a heavy developmental package to rehabilitate the war-torn nation.
Zelenskyy stated that the proposal has been forwarded to Russia for a review. Russia is expected to provide a response after analyzing all tenets of the draft.
Even as diplomatic efforts to end the war continues, in an overnight attack on Ukraine, Russia launched over 650 drones and more than 30 missiles. Zelenskyy has warned that Russia could intensify the attacks after the Christmas holiday.
After accusing Nicolas Maduro's regime in Venezuela of promoting illegal narco-traffic that creates an opioid crisis in the U.S., U.S. President Donald Trump ordered a 'naval blockade' of all sanctioned oil vessels entering and exiting Venezuela.
Following this, the U.S. military captured two big oil tankers linked to Venezuela, named Skipper and Centuries.
Trump proclaimed that the U.S. will either keep the oil to replenish its strategic reserves or may sell it on the market. He also announced that the U.S. would sell the vessel.
Currently, the U.S. Coast Guard is in pursuit of a third vessel (Bella 1) in international waters linked to Venezuela.
Maduro who has denied Trump's allegations, counter-claimed that the U.S. is actually conspiring to lay hands on Venezuela's rich oil reserves under the pretext of false charges and called for urgent U.N. intervention.
Yesterday, U.N. Security Council held an emergency meeting to discuss the conflict where a majority of members advised the U.S. to exercise restraint and avoid further escalation.
Specifically, major powers, Russia and China are currently standing with Venezuela. Both nations have condemned the U.S. actions and Trump's rhetoric.
As China is a major buyer of Venezuelan oil, concerns arise that any direct intervention by China could erupt into a new crisis.
The supply side picture is mixed with the Energy Information Administration raising its 2025 crude production forecast to 13.61 million barrels per day and pruning 2026 output to 13.53 bpd while the International Energy Agency downwardly revised the 2026 surplus projection to 3.84 million bpd.
Data from the American Petroleum Institute revealed that U.S. crude oil inventories increased by 2.4 million barrels for the week ending December 19, marking the first build after four weeks of draws. Crude inventories had contracted by 9.3 million barrels in the previous week.
In the U.S., even with several Federal Reserve officials expressing contrasting perspectives on the need for interest rate cuts, expectations of another lowering are still alive, bolstered by Trump's call for a lower interest rate regime.
CME Group's FedWatch Tool is currently indicating a 13.3% chance of a rate cut by the Fed at its upcoming January 27-28 meeting.
Traditionally, the days between Christmas and New Year remain passive for oil traders as liquidity becomes thin.
Experts feel that the developments in the geopolitical scenario as well as the interest rate decision by the Fed (which could impact the U.S. dollar) would determine the trajectory of oil prices in the near-term.
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