Brent Down To $108 On Ukrainian Peace Plan

Brent crude oil fell to a three week low early on Thursday after reports that Ukraine was moving in a more peaceful direction.

The commodity traded at $108.18 at 7:35 GMT as the increasing global supply came into focus.

Reuters reported that Western diplomats and Ukraine’s newly elected President Petro Poroschenko are working together to develop a peace plan which will de-escalate the nation’s conflict.

Poroshenko said the plan will end fighting between pro-Russian separatists and the Ukrainian government by decentralizing the nation’s power and allowing for local government elections.

Poroshenko may also meet Russian President Vladimir Putin in France this week at a commemoration ceremony for the World War Two D-Day landings.

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Brent’s premium to WTI crude dropped to its lowest point since April 15, below $6.00, after US crude inventory data showed a larger than expected drop. The Energy Information Administration released a report on Wednesday which confirmed that US crude stocks fell by 3.4 million barrels in the week ending on May 30. The figure was far above analysts’ expectations of a 300,000 barrel draw.

Moving forward, investors will have a close eye on the European Central Bank meeting, set to take place later on Thursday. The bank is widely expected to make a bold policy move, which could be positive for oil demand.

Also on investors’ minds will be key US employment data, due out on Friday. The US is set to release non-farm payrolls data which, if positive, would confirm speculation that the nation’s recovery was on solid ground.