Crude oil fell due to uncertainty over global supplies

Oil prices fell more than 1% on Thursday after U.S. President Donald Trump said he and his Russian counterpart, Vladimir Putin, had agreed to meet soon in Hungary to discuss ending the war in Ukraine, raising uncertainty about global energy supplies.

Brent crude futures closed down 85 cents, or 1.37%, at $61.06 per barrel. U.S. West Texas Intermediate futures closed down 81 cents, or 1.39%, at $57.46. These were the lowest closes for both benchmarks since May 5.

Mexican crude oil exports settled at $54.51 per barrel, a drop of 1.36%, or 75 cents. This result marks its lowest level since May 7.

Trump said Thursday that he and Putin had agreed to meet soon in Budapest to discuss ending the war in Ukraine, a day ahead of a planned meeting between the U.S. president and Ukrainian leader Volodymyr Zelensky.

"Geopolitical tensions between Russia, the United States, and Ukraine are beginning to re-emerge," said Tim Snyder, chief economist at Matador Economics, prompting some market participants to liquidate their positions.

Another factor influencing prices was the Energy Information Administration's (EIA) increase of 3.5 million barrels in U.S. crude oil inventories last week, to 423.8 million barrels, compared with analysts' expectations of a 288,000-barrel increase, according to a Reuters poll.

"A modestly bearish report, with a large increase in crude oil offset by a large distillate extraction, but with implied oil demand considerably weaker than last week," said UBS analyst Giovanni Staunovo.

The data also showed an increase in U.S. production to 13.636 million barrels per day, the highest level on record.

Meanwhile, traders were also wary of a potential disruption to Russian oil imports from India, which could reshape flows and boost demand for supplies from elsewhere.

President Trump said Prime Minister Narendra Modi had promised on Wednesday that India would stop buying from Russia, which is India's top oil supplier and accounts for a third of its oil imports.

"This is a positive development for the price of crude oil, as it would eliminate a major buyer of Russian oil," said Tony Sycamore, market analyst at IG.

Both contracts hit their lowest level since early May on Wednesday due to trade tensions between the United States and China and concerns about an impending supply glut.