Oil prices rose on Thursday, recovering some losses from the previous session, as the upcoming meeting between U.S. President Donald Trump and Russian President Vladimir Putin raised uncertainty surrounding the outcome’s impact on the oil market.
Brent crude futures rose 23 cents, or 0.35 percent, to $65.86 a barrel at 4:03 GMT, while U.S. West Texas Intermediate futures gained 20 cents, or 0.32 percent, to $62.85.
Both contracts fell to their lowest levels in two months on Wednesday, following downbeat supply forecasts from the U.S. government and the International Energy Agency (IEA).
U.S.-Russia peace talks in focus
On Wednesday, Trump warned of “severe consequences” if Putin refuses to agree to peace in Ukraine, without detailing what those repercussions might entail. However, he previously threatened economic sanctions should Friday’s meeting in Alaska fail to produce results.
The uncertainty surrounding U.S.-Russia peace talks is keeping a bullish risk premium in the market, as buyers of Russian oil could face increased economic pressure. The outcome of the Ukraine-Russia war and any shifts in Russian oil flows could deliver unexpected surprises to oil prices.
“Investors await Friday’s meeting between U.S. and Russian leaders for fresh direction. Traders are closely watching the lead-up to the talks, which could result in eased U.S. sanctions on OPEC+ member Russia and potentially bring more supply to the market,” said Vijay Valecha, chief investment officer, Century Financial.
Fed rate cut to boost oil demand
Oil prices are also finding support from expectations that the U.S. Federal Reserve will cut rates in September, with market odds for a quarter-point reduction at the September 16–17 meeting reaching 99.9 percent, according to the CME FedWatch tool, after July inflation rose at a moderate pace.
Treasury Secretary Scott Bessent suggested a larger half-point cut could be on the table, given recent weakness in employment data. Lower borrowing costs typically boost oil demand. In addition, the dollar was hovering near multi-week lows against the euro and sterling on Thursday as traders increased bets on the Fed resuming rate cuts next month.
U.S. crude inventories unexpectedly rise
Limiting gains in oil prices was U.S. crude inventories data, which showed an unexpected rise of 3 million barrels in the week ending August 8, according to the U.S. Energy Information Administration, defying forecasts of a 275,000-barrel draw.
“Prices have declined this year as the producer group accelerated output increases despite the risk of oversupply, with U.S. tariff actions adding pressure to global demand. On Tuesday, the U.S. Department of Energy raised its forecast for this year’s global surplus to 1.7 million barrels per day,” added Valecha.
Further weighing on oil prices, the International Energy Agency projected that global oil supply in 2025 and 2026 will grow faster than previously anticipated, driven by higher output from OPEC+ and increased production from non-member countries.
