Oil prices tick up as crude inventories shrink amid supply concerns

Oil prices inched higher on Thursday after sliding the day before, as traders weighed conflicting signals from the global market. Brent crude rose 16 cents to $63.67 a barrel, while U.S. West Texas Intermediate added 17 cents to $59.61.

Wednesday’s dip had followed reports that the U.S. suggested a plan for Ukraine to end its war with Russia, potentially giving up territory and weapons. Markets reacted nervously, fearing that peace could lift sanctions on Russian oil, adding more supply to an already full market.

Analysts say Ukraine is unlikely to accept a deal that seems to favour Russia, but the fact that the U.S. is pursuing diplomacy eased some concerns.

Prices gained support from a surprisingly large drop in U.S. crude inventories. The Energy Information Administration reported a 3.4 million-barrel decline last week, far above analysts’ expectations, driven by higher refinery activity and strong export demand. At the same time, gasoline and diesel stocks increased slightly, hinting at slower domestic consumption.

Traders are also watching the November 21 deadline for U.S. companies to halt business with Russian oil giants Rosneft and Lukoil, which could tighten supply further. For now, the market is balancing between a potential flood of Russian oil and signs that demand, especially in the U.S., remains strong.