Oil prices climbed on Monday, bouncing back somewhat following last week’s notable declines, as markets awaited upcoming discussions between the U.S. and Russia over the ongoing conflict in Ukraine.
As of 08:50 ET (12:50 GMT), October Brent crude futures increased by 0.5%, reaching $66.90 per barrel. Meanwhile, West Texas Intermediate (WTI) crude futures rose 0.4% to $64.13 per barrel. Both benchmarks had fallen more than 4% over the previous week.
U.S.-Russia Talks in the Spotlight
A summit between U.S. President Donald Trump and Russian President Vladimir Putin is scheduled for August 15 to explore potential solutions to end the war in Ukraine. This meeting comes amid escalating U.S. sanctions aimed at curbing Russia’s oil exports, particularly targeting major purchasers China and India.
Trump has imposed tariffs up to 50% on Indian imports to discourage its purchase of Russian oil and has 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,” analysts at ING noted in a recent report. “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.”
Despite these tariff threats, oil prices last week received only limited support, as broader reciprocal tariffs imposed by the U.S. on its key trade partners raised concerns about possible demand setbacks.
China Inflation Disappoints, Awaiting U.S. CPI
July’s consumer price index (CPI) in China remained flat, while the producer price index (PPI) contracted more than expected, pointing to a persistent deflationary trend in the world’s largest oil importer.
These figures followed a series of underwhelming economic data from China, signaling tepid effects from Beijing’s stimulus efforts and easing trade tensions with the U.S. Severe weather conditions in July also appeared to hamper Chinese economic activity.
All eyes this week are on the U.S. CPI report for July, due Tuesday. Market watchers will analyze the data closely for signs of easing inflation, which could increase expectations of a Federal Reserve interest rate cut in September.
Speculators Scale Back Brent Net Long Positions
Recent data shows traders turning bearish on oil despite ongoing sanction and tariff risks. Speculators decreased their net long position in ICE Brent by 20,375 contracts during the last reporting period, leaving 240,977 contracts as of the previous Tuesday. This was mainly due to liquidation of long positions.
Meanwhile, the U.S. oil rig count increased for the first time since April, rising by one to 411 active rigs last week, 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 commented.
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