Oil Prices Edge Higher as Traders Brace for Russian Sanctions Deadline

Core Insights - Oil prices have increased slightly in early Asian trade, recovering from a nearly 2% drop in the previous session, influenced by a mix of demand softness and supply risks, particularly due to impending sanctions on Russian oil [1][3] - Brent futures rose by approximately 16 cents (0.25%) to $63.67 per barrel, while U.S. West Texas Intermediate increased by around 17 cents (0.29%) to $59.42 per barrel [1] - The modest price increase follows a significant drop after reports of renewed diplomatic efforts to resolve the conflict in Ukraine, raising concerns about potential Russian oil supply returning to the market [2] Demand and Supply Dynamics - The rebound in oil prices is primarily driven by traders' focus on the upcoming U.S. deadline to cease operations with major Russian oil producers, which could lead to further oil supply reductions [3] - Despite the recent price recovery, the demand outlook remains weak due to high inventories and global economic uncertainties, indicating that unless demand strengthens, price increases may be limited [4] - Short-term supply concerns are prevalent, but a significant improvement in demand is necessary for a sustainable long-term price rally [4]