- Oil up 2% on US-India trade deal hopes, Russian import curbs.
- Brent $62.28, WTI $58.19; India may cut Russian crude buys.
- US-China talks, Putin summit delay, SPR purchase boost prices
Oil prices edged higher by nearly 2% for a second day in a row. The stock rally was mainly driven by positive expectations regarding the US trade deals with China and India, which might not only change global energy flows but also increase the demand for non-Russian crude. Brent crude futures jumped 96 cents, or 1.6%, to $62.28 per barrel. At the same time, US West Texas Intermediate (WTI) futures were up 95 cents, or 1.7%, to $58.19, the highest in recent sessions.
After a somewhat lackluster day on the stock market, the rally found a new breath of life when US President Donald Trump said that Indian Prime Minister Narendra Modi had told him that India would be limiting its oil purchases from Russia, stating that India is the top supplier, accounting for about one-third of its imports, it is very likely that India will reduce its purchases of Russian crude and increase its sourcing from other countries, thereby pushing prices up.
Also Read: Oil Prices Rise as India May Halt Russian Crude Imports
MUFG analyst Soojin Kim remarked, “This could slowly lead to a reduction of India's imports of oil from Russia, thus creating the demand for other grades.” Investors were also keeping an eye on the US-China trade talks, with officials planning to have talks in Malaysia next week.
Trump said he was looking forward to a "fair" deal with Chinese President Xi Jinping but also suggested that the meeting in South Korea might not take place, which added to the uncertainty. The worries about supply have escalated after the summit of Trump and Putin was called off and the Western countries have been urging the Asian buyers to reduce their imports of Russian oil, which is targeted by sanctions.
Preliminary data from the American Petroleum Institute (API) that was released at the same time as Brent prices show that US crude, gasoline, and distillate stocks have declined last week, thus contributing to the price rise. The US Department of Energy said it is planning to buy 1 million barrels for the Strategic Petroleum Reserve in an attempt to take advantage of the low prices and replenish stockpiles.