Oil fell on expectations that fuel demand will fall as the US summer demand season draws to a close
Oil prices fell on Thursday after rising in the previous session, amid expectations that US fuel demand will fall as the summer demand season draws to a close, and India's response to US tariffs.
Brent and WTI crude oil futures fell after rising 1% in the previous session. Brent crude futures fell 50 cents, or 0.73%, to $67.55 at 06:43 GMT, while WTI crude futures fell 51 cents, or 0.80%, to $63.64.
Both contracts rose in the previous session after the US Energy Information Administration (EIA) reported that US crude inventories had decreased by 2.4 million barrels in the week ending August 22. This decline came despite analysts' expectations of a 1.9 million barrel decrease.
Oil prices are falling this morning as investors reassess yesterday's rally, fueled by the EIA report. While US crude inventories experienced another decline, the pace of decline slowed compared to last week's sharp decline, tempering the upward momentum.
This decline suggests strong demand ahead of the upcoming US Labor Day weekend, but this is routine.
Investors are closely watching how New Delhi responds to Washington's pressure to halt its purchases of Russian oil after Trump raised tariffs on Indian imports by 50% on Wednesday.
India is expected to continue buying Russian crude, at least in the short term, limiting the impact of the new tariffs on global supply.
Another market driver is rising supply as major producers lift voluntary curbs. This offsets some supportive factors, such as Russia and Ukraine escalating their attacks on each other's energy infrastructure.
Ukrainian officials said Wednesday that Russia launched a massive drone attack on energy and gas transportation infrastructure, leaving more than 100,000 people without power.
The possibility of a near-term interest rate cut in the US also supported the oil market, as this could potentially boost economic activity and oil demand.
Federal Reserve officials said interest rates will likely fall at some point, but policymakers need to see incoming economic data before deciding whether a rate cut is appropriate at the Fed's September 16-17 meeting.
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