Oil settles down on renewed push to end Russia-Ukraine war

By Shariq Khan

NEW YORK (Reuters) -Oil prices fell on Wednesday after reports indicated the U.S. is renewing its push to end Russia's war in Ukraine and has drafted a framework for it.

Brent crude futures fell $1.38, or 2.1%, to settle at $63.51 a barrel, while U.S. West Texas Intermediate crude futures closed down $1.30, or 2.1%, to $59.44.

The U.S. has signaled to Ukraine President Volodymyr Zelenskiy that his side must accept a U.S.-drafted framework to end the war with Russia, which proposes Kyiv giving up territory and some weapons, two sources told Reuters.

Zelenskiy said U.S. leadership had to remain effective in order to end the war which has lasted more than 3-1/2 years. The Ukrainian President said his Turkish counterpart Tayyip Erdogan had proposed different formats for talks.

An end to the war in Ukraine might pave the way for higher Russian oil flows, adding to oversupply concerns, analysts said.

"With the amount of oil on the water, in floating storage and what has been sanctioned, prices will probably end up in the low $50s as all of that oil that is sanctioned from Russia will probably come to market," said Scott Shelton, energy specialist at TP ICAP Group.

Last month, the U.S. announced sanctions against Rosneft and Lukoil, setting a November 21 deadline for companies to wind down business with the Russian oil majors. The sanctions had already reduced Moscow's oil revenues and are likely to reduce the amount of oil it can sell in the long-term, the U.S. Treasury said on Monday.

"There is maximum pressure right now as Friday's deadline is looming," said Rystad Energy oil analyst Janiv Shah, adding that a lower geopolitical risk premium would leave investors focusing more closely on weak market fundamentals.

Russia's Deputy Prime Minister Alexander Novak denied that the sanctions were harming oil production, and said Russia will reach its OPEC+ production quota by the end of this year or early next year.

Supporting oil prices, the U.S. Energy Information Administration reported a larger-than-expected draw from U.S. crude stockpiles last week on higher refinery runs and exports. [EIA/S]

The oil market is also suffering "headline fatigue" around Russia-Ukraine news, suggesting will likely stay rangebound in the short term as traders await firm agreements to end the war, said Ed Hayden-Briffett, an oil analyst at Onyx Capital Group.

(Reporting by Shariq Khan, Robert Harvey and Enes Tunagur in London and Jeslyn Lerh in SingaporeAdditional reporting by Sam Li and Lewis Jackson in BeijingEditing by Peter Graff, David Goodman and David Gregorio)