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 simply sitting down face-to-face with the U.S. president represented a victory for Putin, who had been ostracized by Western leaders since Russia's full-scale invasion of Ukraine in 2022. Following the summit, Trump told Fox News' Sean Hannity that he would hold off on imposing tariffs on China for buying Russian oil after making progress with Putin. He did not mention India, another major buyer of Russian crude, which has been slapped with a total 50% tariff on U.S. imports that includes a 25% penalty for the imports from Russia. 'Because of what happened today, I think I don't have to think about that now,' Trump said of Chinese tariffs. 'I may have to think about it in two weeks or three weeks or something, but we don't have to think about that right now.' Trump says Putin summit a prelude to real Ukraine dealmaking Trump has threatened sanctions on Moscow as well but has thus far not followed through, even after Putin ignored a Trump-imposed ceasefire deadline earlier this month. In the Fox News interview, Trump also suggested a meeting would now be set up between Putin and Ukrainian President Volodymyr Zelenskiy, which he might also attend. He gave no further details on who was organizing the meeting or when it might be. Putin made no mention of meeting Zelenskiy when speaking to reporters earlier. He said he expected Ukraine and its European allies to accept the results of the U.S.-Russia negotiation constructively and not try to 'disrupt the emerging progress.' He also repeated Moscow's long-held position that what Russia claims to be the 'root causes' of the conflict must be eliminated to reach a long-term peace, a sign he remains resistant to a ceasefire. 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Trump said he would call Zelenskiy and NATO leaders to update them on the Alaska talks. Trump was due to arrive back in Washington early on Saturday morning. As the two leaders were talking, the war raged on, with most eastern Ukrainian regions under air raid alerts. Governors of Russia's Rostov and Bryansk regions reported that some of their territories were under Ukrainian drone attacks. Russia's air defense systems intercepted and destroyed 29 Ukrainian drones overnight over various Russian regions, including 10 downed over the Rostov region, RIA agency reported on Saturday, citing the Russian defense ministry. The anticlimactic end to the closely watched summit was in stark contrast to the pomp and circumstance with which it began. When Putin arrived at an Air Force base in Alaska, a red carpet awaited him, where Trump greeted the Russian president warmly as U.S. military aircraft flew overhead. 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The meeting also included U.S. Secretary of State Marco Rubio; Trump's special envoy to Russia, Steve Witkoff; Russian foreign policy aide Yury Ushakov; and Russian Foreign Minister Sergei Lavrov. Trump, who said during his presidential campaign that he would end the Ukraine war within 24 hours, conceded on Thursday it had proven a tougher task than he had expected. He had said if Friday's talks went well, quickly arranging a second, three-way summit with Zelenskiy would be more important than his encounter with Putin. Trump ended his remarks on Friday by telling Putin, 'I'd like to thank you very much, and we'll speak to you very soon and probably see you again very soon.' 'Next time in Moscow,' a smiling Putin responded in English. Trump said he might 'get a little heat on that one' but that he could 'possibly see it happening.' Zelenskiy said ahead of Friday's summit that the meeting should open the way for a 'just peace' and three-way talks that included him, but added that Russia was continuing to wage war. 'It's time to end the war, and the necessary steps must be taken by Russia. We are counting on America,' Zelenskiy wrote on Telegram.
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Business Recorder
4 hours ago
- Business Recorder
European shares log second weekly gain, focus on Trump-Putin talks
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