Oil prices inched lower in early trade on Friday, setting the stage for a weekly loss, as markets weighed the impact of an unexpected diplomatic meeting between US President Donald Trump and Russian President Vladimir Putin.
The two leaders are expected to meet in Hungary within the next fortnight to discuss possible measures to end the ongoing conflict in Ukraine, reported Reuters.
Around 6 AM, Brent crude futures slipped 8 cents, or 0.13 per cent, to $60.98 a barrel, while US West Texas Intermediate (WTI) crude fell 9 cents, or 0.16 per cent, to $57.37.
Both benchmarks were on track for weekly declines of around 3 per cent, pressured by renewed concerns of oversupply and weaker demand projections.
Summit Talks Add Volatility to Oil Markets
The announcement of the Trump-Putin summit has added a fresh layer of uncertainty to oil trading sentiment. Analysts say that while the potential for peace talks could ease geopolitical tensions, it could also reduce the risk premium on crude, leading to softer prices.
“Concerns of tighter supplies were eased after it was announced that Trump would be meeting with Putin to discuss ending the war in Ukraine,” said Daniel Hynes, an analyst at ANZ. “Markets are now pricing in a potential resolution scenario, which could alter global trade flows.”
The diplomatic development coincides with mounting pressure on India and China from Washington to scale down their imports of Russian crude. Meanwhile, Kyiv continues to lobby for additional US military aid, including long-range Tomahawk missiles, even as speculation builds around possible negotiations.
Inventory Build-Up and Record US Output Weigh on Sentiment
Further adding to downward pressure, data from the US Energy Information Administration (EIA) showed that domestic crude inventories rose by 3.5 million barrels last week to 423.8 million barrels, significantly higher than the 288,000-barrel increase forecast in a Reuters poll. The larger-than-expected build was attributed to reduced refining activity as several plants entered seasonal maintenance.
In addition, US crude production climbed to 13.636 million barrels per day, its highest level on record, amplifying concerns about global oversupply. The figures underscored the International Energy Agency’s recent outlook that anticipates a growing supply surplus by 2026, driven by resilient US output and slowing demand in major economies.
Oil Heads for Weekly Losses Despite Geopolitical Tensions
Despite geopolitical risk factors that typically buoy crude prices, both Brent and WTI benchmarks are now hovering near their lowest levels since early May. On Thursday, Brent settled 1.37 per cent lower, while WTI declined 1.39 per cent.
Traders remain cautious as they await further clarity from the Trump-Putin talks. The market’s direction in the coming days is likely to hinge on how these diplomatic discussions unfold and whether they bring any concrete progress toward ending the Ukraine conflict.
