Oil climbs on supply risks; weak fundamentals weigh
Oil prices climbed on Thursday as investors remain cautious the U.S.-Russia summit on Ukraine on Friday will lead to a loosening of Russian crude sanctions and may even result in further action against buyers, while a weak market outlook capped gains.
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.
Trump has threatened to enact secondary tariffs on buyers of Russian crude, primarily China and India, if Russia continues with its war in Ukraine.
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.
Source : Reuters
