Oil fell to its lowest settlement price in more than two months as traders awaited a planned meeting between Presidents Vladimir Putin and Donald Trump that may affect the availability of Russian crude supplies in the global market.
West Texas Intermediate futures slipped to settle below $64 a barrel, marking the lowest settlement price since early June. The drop also sealed a six-session losing streak, the longest since December 2023. Kremlin foreign policy aide Yuri Ushakov told reporters Russia and the US had agreed on a venue for the meeting, which would be disclosed later. Meanwhile, the S&P 500 retreated, and the dollar strengthened.
This week has seen a deluge of news around Trump’s push for a ceasefire in Ukraine, with the president doubling tariffs on goods from India due to the nation’s purchases of Russian energy. The levies won’t take effect for another three weeks and stopped short of more punitive measures around oil supplies that some traders had feared.
“It looks like some of this risk premium on Russian oil tariffs is waning with the Trump-Putin meeting upcoming,” said Darrell Fletcher, managing director for commodities at Bannockburn Capital Markets. “With that premium diminishing and fundamentals back in focus, the market is looking at the oversupply for year end.”
Crude has moved lower in August following a run of three monthly gains. Traders are positioning for a potential glut later this year after OPEC+ returned millions of barrels of shuttered capacity to the market. Futures have also been weighed down by concerns about slowing economic growth and weaker energy consumption because of Trump’s broader tariffs, with a globe-spanning swathe of punitive levies coming into effect on Thursday.
Trend-following commodity traders known as CTAs may deepen the slide, potentially selling as much as 30% of their maximum size on Thursday, said Daniel Ghali, a commodity strategist at TD Securities. Large-scale algorithmic selling activity will likely continue over the coming week, even in a flat-price scenario, he added.
“While crude markets are continuing to price out supply risk premia associated with the threat of secondary sanctions on Russian crude purchases, the bar for substantially lower prices is critically low,” Ghali said.
As Trump piles pressure on India, the nation’s state-owned oil refiners are pulling back from purchases of Russian crude for now, according to people with knowledge of the companies’ plans. Any stepback from Russian oil purchases would likely boost the value of alternative grades. While there’s been no move yet against China, another top importer, Trump said that was possible.
US data on Wednesday showed nationwide crude inventories fell 3 million barrels last week as refiners ran at the highest levels for the season since 2019. Still, crude holdings at the key Cushing hub extended a rebound from critical lows, expanding for a fifth week. That’s the longest run of increases since 2023.
Oil Prices
WTI for September delivery fell 0.7% to settle at $63.88 a barrel.
Brent for October settlement slid 0.7% to settle at $66.43 a barrel.
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