Oil prices traded lower yesterday, with ICE Brent hitting its lowest level since late October, ING's commodity experts Ewa Manthey and Warren Patterson note.

Ukraine strikes fail to support Oil prices

"This weakness comes despite continued Ukrainian attacks on Russian energy infrastructure. Also, Moscow warns that it might start striking ships of countries supporting Ukraine. This threat comes in light of recent Ukrainian attacks on Russian vessels. It increases tensions amid ongoing discussions between Russia and the US on Ukraine. Moscow claims talks have been constructive so far. But clearly, the issue of territory will be tough to resolve."

"While the flat price has been under pressure, ICE Brent timespreads have been holding firm, with the prompt spread at US$0.40/bbl of backwardation. Spreads firmed over the last month. This is at odds with an Oil balance meant to become increasingly looser through the fourth quarter and into early next year."

"The latest inventory numbers from the American Petroleum Institute (API) were fairly bearish. US crude Oil inventories rose by 2.48m barrels, while builds were also seen in refined products. Gasoline and distillate stocks increased by 3.1m barrels and 2.88m barrels, respectively. The large product builds should continue to put some downward pressure on product cracks. The more widely followed Energy Information Administration (EIA) report will be released later today."