Oil prices rose on Thursday, as investors remained cautious about the US-Russia summit on Ukraine, which will take place on Friday and could lead to a weakening of sanctions against Russia and even further actions against buyers, while weak market prospects restrained growth, UNN reports with reference to Reuters.
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Brent crude futures rose 24 cents, or 0.37%, to $65.87 a barrel at 03:56 GMT (06:56 Kyiv time), while US West Texas Intermediate crude futures rose 21 cents, or 0.34%, to $62.85.
On Wednesday, both contracts reached a two-month low after negative supply forecasts from the US government and the International Energy Agency (IEA).
On Wednesday, Trump threatened "serious consequences" if Putin did not agree to peace in Ukraine. Trump did not specify what the consequences might be, but he warned of economic sanctions if the meeting in Alaska on Friday proved fruitless.
"The uncertainty of peace talks between the US and Russia continues to add a bullish (rising - ed.) risk premium, given that buyers of Russian oil may face greater economic pressure," Rystad Energy said in a client note.
"How the crisis between Ukraine and Russia will be resolved and how Russian oil flows will change could bring some unexpected surprises," the note said.
Trump threatened to impose secondary tariffs on buyers of Russian oil, primarily China and India, if Russia continued its war in Ukraine.
"Obviously, there is an upside risk for the market if no significant progress is made on a ceasefire," Warren Patterson, head of commodity strategy at ING, said in his note.
The expected oil surplus during the second half of this year and 2026, combined with OPEC's spare capacity, means the market should be able to cope with the impact of secondary tariffs on India, Patterson said.
But the situation becomes more complicated if we see secondary tariffs on other key buyers of Russian crude, including China and Turkey, he said.
Expectations that the US Federal Reserve will cut rates in September are also contributing to rising oil prices. Traders are almost 100% in agreement that a cut will happen after US inflation rose at a moderate pace in July.
US Treasury Secretary Scott Bessent said he believed an aggressive half-percentage point cut was possible, given recent weak employment figures.
The market is pricing in a 99.9% chance of a quarter-percentage point cut at the Fed's September 16-17 meeting, according to CME FedWatch data.
Lower borrowing rates will stimulate oil demand.
Oil prices remained under control, as US oil inventories unexpectedly rose by 3 million barrels in the week ended August 8, according to US Energy Information Administration data on Wednesday.
Also restraining oil price growth was the International Energy Agency's forecast that global supplies would grow faster than expected in 2025 and 2026, as OPEC and its allies increase production and output from outside the group grows.
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