HG MARKETS:

Oil prices edged lower in Asian trading on Thursday after U.S. government data revealed a significantly larger-than-expected rise in crude inventories, while progress on a U.S.-backed Ukraine peace framework added to concerns about future supply levels.

Brent crude futures for January delivery slipped 0.25% to $62.84 per barrel, and West Texas Intermediate (WTI) futures declined 0.4% to $58.40 per barrel. The pullback came despite both benchmarks gaining more than 1% on Wednesday amid growing expectations of a Federal Reserve rate cut next month a move typically supportive of commodity markets, including crude.

The latest report from the U.S. Energy Information Administration (EIA) showed crude stockpiles rising by 2.8 million barrels for the week ending November 21, far exceeding market forecasts for a modest build of just 55,000 barrels. Gasoline inventories climbed by 2.5 million barrels, while distillate stocks increased by 1.1 million barrels. Signaling a mixed demand environment across the fuel sector.

ING analysts noted that the inventory surge was largely driven by a 560,000 barrels-per-day drop in crude exports, coupled with a 486,000 barrels-per-day increase in imports. The unexpected builds limited further price gains and reinforced market concerns that global supply may outpace demand heading into 2026. The EIA and other agencies have repeatedly warned that expanding production and rising stock levels could weigh on prices next year.

Geopolitical developments also influenced market sentiment. The United States is advancing its proposed Russia-Ukraine peace plan, with Ukrainian President Volodymyr Zelenskiy signaling willingness to move forward under the U.S.-supported framework. U.S. envoy Steve Wit off is set to visit Moscow next week to discuss the initiative, raising the prospect of a ceasefire or partial easing of Western restrictions on Russian energy exports.

Analysts caution that any agreement easing sanctions could release additional Russian supply into an already well-stocked global market, further pressuring prices. A peace deal would likely eliminate much of the supply risk currently priced in and could lead to the lifting of U.S. sanctions on Russia. However, trading activity is expected to remain subdued today due to the U.S. Thanksgiving holiday.”

Market focus now turns to the upcoming OPEC+ meeting scheduled for this weekend. Analysts widely expect the group to maintain current production levels, given that the fundamental market outlook remains broadly unchanged from its previous meeting.