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Oil rises amid signs of strong demand, uncertainty over Russia-Ukraine peace efforts
AI Summary
- Oil prices rose by 1% on Thursday, supported by signs of strong demand in the United States and uncertainty surrounding efforts to end the war in Ukraine
- Analysts predict that if hostilities in Ukraine are halted and Russia returns to the international stage, oil prices could decrease, but for now, $65 per barrel remains a key level to watch
- US President Donald Trump announced a 25% tariff on Indian goods due to their purchases of Russian crude, which account for about 35% of India's total oil imports, leading to uncertainty and reinforcing bullish sentiment among traders
Oil prices rose by 1% on Thursday, supported by signs of strong demand in the United States, while uncertainty surrounding efforts to end the war in Ukraine added further support to the market.
Brent futures climbed 64 cents, or nearly 1%, to $67.48 a barrel by 10:12 GMT, near a two-week high. US West Texas Intermediate (WTI) futures also rose 65 cents, or 1%, to $63.36 a barrel. Both contracts had gained more than 1% in the previous session.
Russia said on Wednesday that attempts to resolve security issues linked to the war in Ukraine without Moscow’s participation represented a “dead end.”
Independent analyst Gaurav Sharma said: “If the White House does succeed in halting hostilities in Ukraine and Russia gradually returns to the international stage, that would be a bearish factor for oil. But for now, the $65 per barrel level remains a floor for Brent prices to watch.”
Meanwhile, US President Donald Trump announced an additional 25% tariff on Indian goods starting August 27, citing India’s purchases of Russian crude, which account for about 35% of its total oil imports. Russian officials in New Delhi said on Wednesday that Moscow expected to continue supplying India with oil despite US warnings.
With uncertainty lingering over progress toward ending the war in Ukraine, the prospect of tougher sanctions on Russia reemerged, reinforcing bullish sentiment among traders, according to Thomas Varga, analyst at PVM Oil Associates.
At the same time, data from the US Energy Information Administration on Wednesday showed crude inventories fell by 6 million barrels last week to 420.7 million barrels, compared with expectations in a Reuters poll for a 1.8 million-barrel decline.
Ashley Kelty of Panmure Liberum noted that the sharp drawdown in inventories indicated stronger demand, but rising crude levels at the Cushing hub suggested actual demand might be weaker, with the larger-than-expected draw partly driven by higher refinery runs and increased exports.
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