(Bloomberg) -- Oil inched down as bearish US crude stockpile data took the wind out of a two-day rally on escalating tensions between Russia and Ukraine.
West Texas Intermediate fell 0.7% to settle below $69 a barrel. Earlier, prices climbed amid Ukraine’s firing of British cruise missiles at military targets inside Russia for the first time, while the Kremlin stepped up its threat of a nuclear response. The advance lost steam after the Energy Information Administration said US crude stockpiles rose 545,000 barrels last week while gasoline inventories swelled 2.05 million barrels.
Still, geopolitical developments remain prominent. Russia said it’s prepared to discuss a potential cease-fire in Ukraine with US President-elect Donald Trump, even as the conflict intensifies on all fronts while the warring sides seek to strengthen their bargaining positions.
“The Ukraine war has roared back into importance for investment markets,” said John Evans, an analyst at PVM Oil Associates. “The oil market will once again enter into another bout of geopolitical versus supply push and pull.”
The expiration of WTI’s December contract on Wednesday also contributed to choppy trading.
Oil prices have been buffeted by mixed signals on the two conflicts currently roiling world markets, and the prospect of a supply surplus next year. Still, oil’s longstanding geopolitical risk premium has evaporated in recent months, while implied volatility for Brent has trended lower since the middle of last month.
In the Middle East, the US has stepped up efforts to reach a cease-fire between Lebanese militant group Hezbollah and Israel before Joe Biden’s term as president ends, and Iran has agreed to stop producing uranium enriched to near bomb-grade.
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