Oil prices rose modestly in Asian trading on Thursday, supported by renewed strikes on Russian oil infrastructure and the lack of progress in diplomatic efforts to end the war in Ukraine.

As of 22:53 ET (03:53 GMT), Brent Oil Futures expiring in February rose 0.4% to $62.89 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.5% to $59.23 per barrel.

Stalled Ukraine peace talks support oil

A Reuters report on Wednesday, citing sources, said that Ukrainian forces struck the Druzhba pipeline in Russia’s central Tambov region. The move revived concerns over potential disruptions to Russian oil exports.

At the same time, high-level peace talks between U.S. and Russian officials concluded without any breakthrough on Tuesday -- quashing hopes that sanction on Russian oil might be eased and leaving markets braced for continued geopolitical risk.

But, the bullish sentiment ran into headwinds from U.S. inventory data released by the U.S. Energy Information Administration (EIA).

The report showed U.S. crude stocks rose by 574,000 barrels in the week ended November 28, defying the expectation of a 1.9 million-barrel draw.

Inventories of gasoline and distillates also climbed sharply — with gasoline up by 4.52 million barrels and distillates by 2.1 million barrels.

The simultaneous build in crude and refined products underlines lingering demand weakness in the world’s largest oil consumer, thereby offsetting much of the risk-driven price support.

US data fuels Fed cut bets

Traders and investors have upped their expectations that the Fed will lower interest rates at next week’s policy meeting, pricing in roughly a 90% chance of a 25-basis-point cut.

Rate-cut expectations support oil prices by weakening the dollar and boosting economic activity, which together lift global fuel demand.

Easing bets remained firm after a weaker-than-expected reading from the private sector labour market. ADP said U.S. private payrolls shrank by 32,000 in November — a surprising drop after a revised gain the prior month and far below economists’ consensus for a gain.

Meanwhile, the Institute for Supply Management (ISM) services index for November came in at 52.6 -- its strongest in nine months -- while underlying price measures eased, offering a more benign inflation backdrop.