Crude retreated after a US government report showed rising inventories of fuel and other refined products, easing supply concerns while investors tracked stalled diplomatic attempts to end Russia’s war on Ukraine.

West Texas Intermediate dropped 2.1% to trade above $59 a barrel, the biggest loss in a week. Ukrainian President Volodymyr Zelenskiy arrived in Turkey to “reinvigorate negotiations,” raising eyebrows among investors that had all but written off a deescalation of a conflict that has spurred restrictions on Russia’s energy sector.

An Axios report that Washington has been working in consultation with the Kremlin to draft a new plan also eased supply concerns, though Moscow denied any talks. US envoy Steve Witkoff was expected to meet Ukrainian leaders in Turkey on Wednesday but postponed his trip, Axios reported.

The developments may help cushion the impact of US sanctions against Russia’s two biggest oil producers, Rosneft PJSC and Lukoil PJSC, which are set to kick in within days. The US Treasury claimed the restrictions are already undermining Russia’s funding capacity. That’s particularly visible in surging diesel-market tightness, in which Russia is a significant player, raising concerns about shortages of heating fuel just ahead of winter.

Some of those fears were allayed after the US Energy Information Administration reported on Wednesday that gasoline and distillate inventories in the US expanded for the first time in more than a month. Heating oil futures dropped as much as 5.2% after touching the highest since April 2024 on Tuesday, leading the energy complex lower.

“Higher refining activity and lower implied demand for both helped gasoline and distillate inventories rise, albeit modestly for distillates,” said Matt Smith, Americas lead oil analyst at Kpler.

The 3.4 million-barrel decline in US crude inventories last week was smaller than the American Petroleum Institute’s 4.4 million estimate, helping temper some oversupply fears.