US fuel demand lifts oil prices but Ukraine war clouds outlook

SINGAPORE: Global oil prices edged higher on Thursday, lifted by signs of strong demand in the United States, the world’s largest oil consumer.

Brent crude futures rose 13 cents, or 0.19 percent, to $66.97 a barrel at 0055 GMT, adding to the 1.6 percent gain from the previous session. US West Texas Intermediate (WTI) crude was up 15 cents, or 0.24 percent, at $62.86, after climbing 1.4 percent on Wednesday.

US stockpiles fall sharply

Fresh data from the US Energy Information Administration (EIA) showed crude inventories fell by 6 million barrels last week to 420.7 million barrels. That drop was far bigger than the 1.8 million-barrel decline analysts had expected.

Petrol stocks also fell by 2.7 million barrels, well above forecasts for a smaller 915,000-barrel draw. The figures pointed to steady driving demand during the summer travel season. Jet fuel consumption also strengthened, with the four-week average hitting its highest level since 2019.

“Crude oil prices rebounded as signs of strong demand in the US boosted sentiment,” said Daniel Hynes, senior commodity strategist at ANZ. But he warned that some caution remains as markets continue to watch developments in the war in Ukraine.

Ukraine conflict and sanctions weigh on outlook

Peace talks aimed at ending Russia’s invasion of Ukraine have dragged on, leaving Western sanctions on Russian crude in place. Analysts say the possibility of further US restrictions on buyers of Russian oil could keep markets uneasy.

Moscow, however, has remained defiant. Russian diplomats in India said on Wednesday the country expects to continue selling crude to Indian refiners despite warnings from Washington.

Tensions between the US and India have also escalated. President Donald Trump announced a 25 percent tariff on Indian goods starting August 27, citing New Delhi’s continued purchases of Russian oil. Meanwhile, the European Union sanctioned Indian refiner Nayara Energy, which is partly owned by Russia’s Rosneft.

Although some Indian refiners initially paused their Russian imports, companies like Indian Oil and Bharat Petroleum have since returned to the market. They have booked Russian cargoes for September and October, taking advantage of deep discounts.

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