Oil regains ground from two-month lows ahead of Trump-Putin meeting
Brent crude futures were up 28 cents, or 0.43 per cent, at US$65.91 a barrel at 0057 GMT, while US West Texas Intermediate crude futures rose 23 cents, or 0.37 per cent, to US$62.89.
Both contracts hit their lowest in two months on Wednesday after bearish supply guidance from the US 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 US-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."
Another support for oil is that the expectation that the US Federal Reserve will cut rates in September is at close to 100 per cent after US 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 per cent, according to the CME FedWatch tool.
Lower borrowing rates would drive demand for oil. The dollar was hovering near multi-week lows against the euro and sterling on Thursday as traders ramped up bets for the Fed to resume cutting interest rates next month.
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 US Energy Information Administration on Wednesday, against expectations in a Reuters poll for a 275,000-barrel draw.
Also, holding oil back was an International Energy Agency forecast that 2025 and 2026 world oil supply would rise more rapidly than expected, as the Organisation of the Petroleum Exporting Countries and its allies, together known as OPEC+, increase output and production from outside the group grows.
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