Oil rallies as Ukraine hopes lift sentiment

World oil prices rebounded Wednesday following the prior day's heavy losses in a rally spurred in part by hopes for a resolution to the Ukraine conflict.
US benchmark West Texas Intermediate for October delivery gained $2.66 to close at $95.54 on the New York Mercantile Exchange, largely recovering from a more than $3 drop the prior day.
European benchmark Brent oil for delivery in October jumped $2.43 to $102.77 a barrel in London, coming back from a fall Tuesday to its lowest level since May 2013.
James Williams, an analyst at WTRG Economics, called the rebound normal after such a deep one-day fall, although the extent of Wednesday's bounce was "a little bit surprising."
"People are anticipating better jobs numbers at the end of the week" when the Department of Labor releases its US jobs report for August, Williams added.
Analysts said Wednesday's developments in Ukraine were also a factor in the rally, with an end to the fighting seen as potentially lifting oil consumption.
Russian President Vladimir Putin unveiled a peace plan for Ukraine that could be agreed by the weekend to end a months-long conflict that has resulted in some 2,600 deaths.
Hopes rose for a cease-fire following a phone call between Putin and Ukrainian President Petro Poroshenko.
However, Ukrainian Prime Minister Arseniy Yatsenyuk warned that Putin's announcement was not sincere and US President Barack Obama said it is  "too early to tell" if the agreement will hold up.
"Although there has been some small risk that the conflict would lead to a halt in Russian crude oil exports," news of a "possible ceasefire in Ukraine would remove a threat to demand," said Tim Evans, energy analyst at Citi Futures.
Traders are also preparing for Thursday's Department of Energy report on US oil inventories.
Analysts expect oil inventories to have fallen by 1.1 million barrels, according to a survey of analysts by the Wall Street Journal.