Oil prices fell on Thursday as investors weighed the outlook for U.S. fuel demand with the end of the summer driving season near, while assessing potential crude supply shifts as India faces punishing U.S. tariffs for importing Russian oil.
Brent crude futures dropped 31 cents, or 0.46%, to $67.74 at 0027 GMT, and West Texas Intermediate (WTI) crude futures dropped 36 cents, or 0.56%, to $63.79, after climbing more than 1% in the previous session.
The U.S. Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 2.4 million barrels in the week ended August 22, compared with analysts’ expectations in a Reuters poll for a 1.9-million-barrel draw.​​
The drop signalled strong demand ahead of the upcoming U.S. Labor Day long weekend. However, this typically marks the unofficial end of the summer driving season and the onset of lower U.S. demand, IG market analyst Tony Sycamore said.
On technical charts, crude faces resistance at $64-$65, while it is vulnerable to a test of support near $60, he said.
Traders are watching out for how New Delhi responds to pressure from Washington to stop buying Russian oil, after U.S. President Donald Trump doubled tariffs on imports from India to as much as 50% on Wednesday.
“India is expected to continue purchasing crude oil from Russia at least in the short term, which should limit the impact of the new tariffs on global supply,” said Sycamore.
Underpinning oil price gains this week, Russia and Ukraine have stepped up attacks on each other’s energy infrastructure.
Russia launched a massive drone attack on energy and gas transport infrastructure across six Ukrainian regions overnight, leaving more than 100,000 people without power, Ukrainian officials said on Wednesday.
The prospect of a near-term interest rate cut in the U.S. has also supported the oil market, as that would potentially boost economic activity and oil demand.
New York Federal Reserve Bank President John Williams said on Wednesday rates will likely fall at some point, but policymakers will need to see upcoming economic data before deciding whether it is appropriate to make a cut at the Fed’s September 16-17 meeting.
