Oil gains capped by surplus risks despite inventory draw
Additional support came from expectations that the Federal Reserve could cut interest rates in September, potentially boost consumption and easing financing costs for oil storage.
Oil prices held largely steady on Friday, with traders weighing tentative progress in Russia-Ukraine peace talks against expectations of a looming supply surplus.
Brent crude rose 6 cents, or 0.1%, to $67.73 a barrel.
while West Texas Intermediate gained 14 cents, or 0.2%, to $63.66. For the week, Brent advanced 2.9% and WTI added 1.4%.
Market sentiment was bolstered by inconclusive negotiations between the US and Russia, which offered little clarity on a resolution to the conflict. Prices were further supported by stronger-than-expected US demand, after government data showed crude inventories fell by 6 million barrels in the week ended 15 Aug, far exceeding forecasts for a 1.8-million-barrel draw.
Additional support came from expectations that the Federal Reserve could cut interest rates in September, potentially boost consumption and easing financing costs for oil storage.
Still, traders remain cautious as supply-side risks build. Analysts warn that global markets are on track for a sizeable surplus in the coming quarters, with softer demand after peak summer consumption and fresh geopolitical frictions. Washington’s recent threat to impose 50% tariffs on Indian imports of Russian oil has added uncertainty to the global oil trade outlook, though the prospect of oversupply continues to cap gains.
Written: Farid Muzaffar