Oil prices closed higher on Wednesday after hitting a one-month low in the previous session, as investors weighed supply surplus concerns against progress in Russia-Ukraine peace negotiations.

The January West Texas Intermediate (WTI) crude contract on the New York Mercantile Exchange rose $0.70, or 1.21%, to settle at $58.65 per barrel. Meanwhile, the January Brent crude contract gained $0.65, or 1.04%, closing at $63.13 per barrel.

Both Brent and WTI crude had fallen by 89 cents on Tuesday after Ukrainian President Volodymyr Zelensky told European leaders that he was ready to advance a U.S.-backed ceasefire framework, with only a few remaining disagreements to resolve.

Priyanka Sachdeva, an analyst at Phillip Nova, noted, "Market fundamentals remain tilted to the downside, with investors increasingly pricing in expectations of a supply surplus by 2026 and lacking a strong enough demand catalyst to offset this."

Tony Sycamore, an IG market analyst, stated in a client note, "If a peace deal is ultimately reached, it could quickly lift Western sanctions on Russian energy exports. This may push WTI prices down to around $55. The market is still awaiting clearer signals, but unless talks collapse, downside risks persist."

U.S. President Donald Trump said he had assigned representatives to meet separately with Russian President Vladimir Putin and Ukrainian officials. Ukrainian officials indicated that Zelensky may visit the U.S. in the coming days to finalize the agreement. Meanwhile, the UK, Europe, and the U.S. have recently tightened sanctions on Russia, while India's purchases of Russian oil are expected to drop to a three-year low in December.

Market sources citing American Petroleum Institute data reported on Tuesday that U.S. crude inventories declined last week while fuel stockpiles rose. A Reuters survey had previously estimated a 1.86 million-barrel increase in U.S. crude inventories for the week ending November 21.