Oil Prices Ease as Summer Demand Fades and Trade Tensions Rise

Highlights:

• Brent crude slipped to its lowest level since May, trading near US$64 per barrel at the time of writing, as ceasefire hopes pressured prices.
• WTI crude also declined, hovering around US$60 per barrel, marking a sharp drop from last week’s levels.
• Optimism around peace talks weighed on market sentiment, although traders remain cautious given ongoing geopolitical risks.

Market Snapshot

Oil prices retreated in early Asian trading on Thursday, giving back part of the previous session’s gains. At the time of writing, West Texas Intermediate (WTI) crude was down 0.61% at $63.76 per barrel, while Brent crude slipped 0.6% to $67.64. The pullback follows Wednesday’s rebound, but both benchmarks remain on track for their steepest monthly decline since April.

Mixed Signals from U.S. Inventories

Fresh data from the U.S. Energy Information Administration (EIA) showed a 2.4 million-barrel drop in crude inventories for the week ending August 22, outpacing forecasts for a 1.9 million-barrel decline. Notably, stockpiles at Cushing, Oklahoma—the key delivery point for U.S. crude futures—fell for the first time in two months. The drawdown reflects resilient demand heading into the Labor Day holiday, the unofficial close of the peak summer driving season. However, refinery runs slowed across all major regions, pulling national throughput to its lowest since early July. Analysts caution that softer refinery activity may limit the pace of stock draws in the coming weeks as travel demand subsides.

Trade and Geopolitical Pressures

Beyond supply-demand fundamentals, investors are monitoring escalating U.S.–India trade tensions. Washington recently doubled tariffs on Indian imports to 50% in a bid to curb New Delhi’s purchases of Russian crude. Analysts, however, expect India to maintain current buying levels, blunting the immediate effect on global supply. Meanwhile, the Russia–Ukraine conflict continues to add uncertainty. Kyiv reported a wave of drone strikes on energy facilities this week, disrupting power to more than 100,000 people and heightening risks to Europe’s energy security.

Outlook

With summer demand cooling, OPEC+ supply increasing, and geopolitical frictions intensifying, oil markets remain volatile. Traders are also eyeing potential U.S. Federal Reserve rate cuts, which could support economic activity and, in turn, energy demand. For now, crude prices appear locked in a fragile balance between bullish inventory data and bearish macro headwinds.

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