Oil Prices Gain Amid Strong US Demand, But Russia-Ukraine Tensions Weigh
Data from the US Energy Information Administration (EIA) showed that crude stockpiles fell sharply by 6 million barrels last week, leaving inventories at 420.7 million barrels.
Oil prices registered modest gains on Thursday as evidence of stronger-than-expected demand in the United States, the world’s largest oil consumer, lifted sentiment in the market. The rise came on the back of a sharp fall in US crude and fuel inventories, indicating sustained consumption during the summer season.
Early this morning near 6:30 AM, Brent crude futures were trading 13 cents higher, or up 0.19 per cent, at $66.97 a barrel, following a 1.6 per cent surge in the previous session. US West Texas Intermediate (WTI) crude futures rose by 15 cents, or 0.24 per cent, to $62.86 per barrel after a 1.4 per cent increase the day before, reported Reuters.
Inventory Drops Exceed Expectations
Data from the US Energy Information Administration (EIA) showed that crude stockpiles fell sharply by 6 million barrels last week, leaving inventories at 420.7 million barrels.
Gasoline stocks also posted a substantial drop of 2.7 million barrels, well above expectations for a draw of 915,000 barrels. Analysts noted that the reduction was a reflection of steady driving activity during the peak travel season. The EIA also reported that the four-week average for jet fuel demand climbed to its highest level since 2019, underscoring robust consumption across transport fuels.
“Crude oil prices rebounded as signs of strong demand in the US boosted sentiment,” said Daniel Hynes, senior commodity strategist at ANZ. However, he warned that “bearish sentiment remains evident as traders continue to monitor negotiations to end Russia’s war against Ukraine.”
Geopolitical Uncertainty Weighs on Market
While US demand indicators provided a boost, traders remained cautious due to the ongoing conflict in Ukraine and its repercussions for global supply. Russia has rejected efforts by Western powers to discuss post-conflict security arrangements without its involvement, describing such initiatives as a “road to nowhere.”
As peace negotiations stall, sanctions on Russian crude exports continue to shape the market. Additional pressure comes from the prospect of fresh US sanctions or tariffs targeting countries that buy Russian oil.
India Caught in the Middle
India has emerged as a key focus in the evolving sanctions debate. Russian officials stated in New Delhi that Moscow intends to maintain its oil supplies to India despite warnings from Washington. In response, US President Donald Trump announced that a 25 per cent tariff on Indian goods will take effect from 27 August due to its purchases of Russian crude.
Meanwhile, the European Union has imposed sanctions on Indian private refiner Nayara Energy, which has links to Rosneft, Russia’s state-backed oil company. Initially, Indian refiners scaled back their Russian imports following international pressure. However, widening discounts on Russian crude prompted state-run Indian Oil and Bharat Petroleum to resume purchases for September and October deliveries.
Market analysts suggest that while US demand fundamentals are lending support to prices, geopolitical headwinds continue to cloud the outlook. The interplay of sanctions, tariffs and supply shifts is expected to remain a critical factor influencing oil market movements in the weeks ahead.
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