HG MARKETS:

Oil prices advanced more than 1% on Thursday, supported by growing optimism over potential U.S.-EU trade negotiations and a larger-than-expected decline in U.S. crude inventories, which helped improve the outlook for global economic stability.Brent crude futures were up 79 cents, or 1.15%, to $69.30 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 83 cents, or 1.3%, to $66.08 per barrel.

Market sentiment was buoyed after two European diplomats reported that the European Union and the United States are making progress toward a potential trade agreement. The proposed deal could involve a 15% baseline U.S. tariff on EU imports, with possible exemptions. If finalized, it would follow the recent trade agreement between the U.S. and Japan, potentially paving the way for another significant transatlantic accord.

On the supply side, data from the U.S. Energy Information Administration (EIA) released on Wednesday showed that U.S. crude oil inventories fell by 3.2 million barrels last week, bringing total stockpiles down to 419 million barrels. The drawdown was substantially larger than analysts’ expectations of a 1.6 million-barrel decrease, contributing further to upward price pressure.

Additional support for oil prices came from concerns over potential supply disruptions. Reports emerged of delays in loading CPC (Caspian Pipeline Consortium) crude exports from Kazakhstan via the Black Sea, attributed to administrative interference from Russian authorities. Further market tension was driven by contamination issues related to Azeri crude loadings from the Turkish port of Ceyhan. However, Kazakhstan’s energy ministry stated on Thursday that crude loadings through Russian sea ports have not been suspended, according to Interfax news agency.

Despite these supportive factors, broader market gains were tempered by ongoing geopolitical uncertainties. Negotiations between the U.S. and China, along with fragile peace talks between Russia and Ukraine, continue to weigh on investor sentiment.

Russia and Ukraine held peace discussions in Istanbul on Wednesday, focusing primarily on prisoner exchanges. However, the two sides remain divided on the conditions for a ceasefire and the possibility of a direct meeting between their leaders.