Oil climbs on supply risks; weak fundamentals weigh
Brent crude futures were up 24 cents, or 0.37%, at $65.87 a barrel at 0356 GMT, while U.S. West Texas Intermediate crude futures rose 21 cents, or 0.34%, to $62.85.
Both contracts hit their lowest in two months on Wednesday after bearish supply guidance from the U.S. government and the International Energy Agency (IEA).
Trump on Wednesday threatened "severe consequences" if Putin does not agree to peace in Ukraine. Trump did not specify what the consequences could be, but he has warned of economic sanctions if the meeting in Alaska on Friday proves fruitless.
"The uncertainty of U.S.-Russia peace talks continues to add a bullish risk premium given Russian oil buyers could face more economic pressure," Rystad Energy said in a client note.
"How Ukraine-Russia crisis resolves and Russia flows change could bring some unexpected surprises."
Trump has threatened to enact secondary tariffs on buyers of Russian crude, primarily China and India, if Russia continues with its war in Ukraine.
"Clearly there's upside risk for the market if little progress is made" on a ceasefire," said Warren Patterson, head of commodities strategy at ING, in a note.
The expected oil surplus through the latter part of this year and 2026, combined with spare capacity from the Organization of the Petroleum Exporting Countries, means that the market should be able to manage the impact of secondary tariffs on India, Patterson said.
But things become more difficult if we see secondary tariffs on other key buyers of Russian crude oil, including China and Turkey, he said.
Expectations the U.S. Federal Reserve will cut rates in September is also supportive for oil. Traders are almost 100% agreed a cut will happen after U.S. inflation increased at a moderate pace in July.
Treasury Secretary Scott Bessent said he thought an aggressive half-point cut was possible given recent weak employment numbers.
The market is putting the odds of a quarter-percentage point cut at the Fed's September 16-17 meeting at 99.9%, according to the CME FedWatch tool.
Lower borrowing rates would drive demand for oil.
Oil prices were kept in check as crude inventories in the United States unexpectedly rose by 3 million barrels in the week ended on August 8, according to the U.S. Energy Information Administration on Wednesday.
Also holding oil prices back was an International Energy Agency forecast that 2025 and 2026 global supply would rise more rapidly than expected, as OPEC and its allies increase output and production from outside the group grows.
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But I am very much in the camp of the active investor and advocate taking an interest in what happens to our money when picking funds and shares. Most unit or investment trust managers, and most companies listed on the stock market, publish information freely online that could only be found in business libraries when I began investing. Many companies' and funds' websites also include the ability to input your email address to automatically get news updates on much the same basis as the big investment institutions. To be specific, this feature is offered by the tractor-maker, Deere and the burger-flipper, McDonald's, my two most valuable shareholdings; as well as Ecofin Global Utilities and Infrastructure, my most valuable investment trust shareholding, among others. Income-seekers can keep track of the date and value of our next payment via free websites including DividendMax and MarketBeat. Trade association websites and online investment platforms also provide valuable information with live data. The Association of Investment Companies (AIC) recently campaigned successfully for platforms to provide individual investors with the right to vote. No wonder the AIC chairman, Richard Stone, hailed 'a new era for shareholder rights'. The internet has disrupted the exclusive access that institutional investors used to enjoy with masses of information that is now freely available to individual investors. But we still need to find the time to read it. • Full disclosure: Ian Cowie's shareholdings
