Oil markets saw a modest recovery on Monday following last week’s steep declines, as investors awaited a high-profile U.S.-Russia summit aimed at resolving the conflict in Ukraine.
At 08:50 ET (12:50 GMT), October Brent futures rose 0.5% to $66.90 per barrel, while West Texas Intermediate (WTI) crude futures edged up 0.4% to $64.13 per barrel. Both benchmarks had tumbled over 4% in the previous week.
Focus on August 15 Summit
The upcoming meeting between U.S. President Donald Trump and Russian President Vladimir Putin, scheduled for August 15, has become a focal point for markets hoping for a breakthrough to end the war in Ukraine. This comes as Washington intensifies sanctions targeting Russia’s oil exports, specifically pressuring major buyers China and India.
Trump recently imposed tariffs up to 50% on Indian imports to deter purchases of Russian oil and threatened similar measures against China.
“With Russia demanding that Ukraine cede occupied territory to end the war, it’s difficult to see a quick solution,” said ING analysts in a note. “It’s unlikely that Ukraine will agree to give up its own territory. If we do see some level of de-escalation, it would remove sanction risk from the oil market. This would likely drive prices lower, given the bearish fundamentals.”
Last week, tariff threats provided limited support to oil prices amid concerns that broader U.S. tariffs on key trading partners could hurt demand.
Chinese Inflation Data Underwhelms, Eyes on U.S. CPI
China’s July consumer price inflation remained flat, while producer prices fell more sharply than anticipated, underscoring ongoing deflationary pressures in the world’s largest oil importer.
The latest data continues a trend of mixed economic signals from China, reflecting moderate stimulus impact and easing trade tensions with the U.S. Additionally, severe weather in July appears to have slowed economic activity.
Markets now turn to the U.S. Consumer Price Index (CPI) data due Tuesday, with investors watching for any signs of cooling inflation that could boost expectations for a Federal Reserve rate cut in September.
Speculators Cut Back on Brent Long Positions
Despite sanctions and tariff risks, traders have become more cautious. The latest figures reveal a reduction of 20,375 net long contracts in ICE Brent futures, leaving a total of 240,977 contracts as of last Tuesday, largely due to long liquidation.
U.S. oil rig activity rose slightly for the first time since April, with one additional rig coming online last week, totaling 411 active rigs according to Baker Hughes (NASDAQ:BKR).
“Rig activity has declined significantly in recent months amid price weakness and the bearish market outlook. However, more recent price stability helped to slow the decline in the rig count,” ING noted.
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