Oil cools as driving season nears close

SINGAPORE: Oil prices fell on Thursday, reversing gains from the previous day, as traders balanced concerns over US fuel demand with uncertainty about India’s position on Russian crude in the face of fresh American tariffs.

Brent crude futures slipped 31 cents, or 0.46 percent, to $67.74 a barrel at 0027 GMT. US benchmark West Texas Intermediate (WTI) dropped 36 cents, or 0.56 percent, to $63.79. Both benchmarks had risen by more than 1 percent in the previous session.

US demand

The latest data from the US Energy Information Administration showed crude stockpiles declined by 2.4 million barrels last week, a bigger drop than the 1.9 million barrels analysts had expected. The drawdown reflected strong demand ahead of the Labor Day holiday weekend, which is usually marked by heavy travel.

Yet, that weekend also signals the end of the US summer driving season. IG market analyst Tony Sycamore said demand typically tapers off afterwards, with oil facing technical resistance at $64 to $65 a barrel and vulnerable to testing support near $60.

India caught between Moscow and Washington

Markets are also watching how India navigates pressure from Washington. President Donald Trump this week doubled tariffs on Indian imports to as high as 50 percent, in a move widely seen as punishment for New Delhi’s continued purchase of Russian oil.

“India is expected to keep buying Russian crude at least in the short term, which should cushion global supply from any immediate shock,” Sycamore noted.

Geopolitics and rate hopes

Geopolitical risks remain a source of support. Russia carried out a large-scale drone assault on Ukraine’s energy and gas transport facilities across six regions on Wednesday, leaving over 100,000 people without electricity.

At the same time, investors are factoring in the possibility of a US interest rate cut next month. New York Fed President John Williams said policymakers will study upcoming economic data before making a decision, but he acknowledged that rates are expected to fall “at some point.”

With traders juggling demand concerns, trade disputes and geopolitical risks, oil prices appear set for a volatile stretch ahead.