Oil prices continued to rise on Thursday, supported by indications of robust demand in the U.S. and lingering uncertainty surrounding efforts to resolve the war in Ukraine.
Brent crude futures reached a two-week high in early trading, gaining 27 cents, or 0.40 per cent, to $67.11 a barrel at 0442 GMT. U.S. West Texas Intermediate (WTI) crude futures increased by 29 cents, or 0.46 per cent, to $63 a barrel.
Both benchmarks had advanced by over 1 per cent in the previous session.
What’s behind the rally?
As U.S. and European military officials started discussing post-war security assurances for Ukraine, Russia on Wednesday warned that addressing security concerns without its involvement would lead to a “dead end.”
Ongoing challenges in achieving peace in Ukraine have kept Western sanctions on Russian oil intact, with the threat of stricter sanctions and additional tariffs on Russian oil buyers still looming over the market.
Meanwhile, Russia maintains its stance on continuing crude exports to interested nations, with its diplomats in India stating that the country plans to keep supplying oil to India despite U.S. warnings.
U.S. President Donald Trump had declared a new 25 per cent tariff on Indian goods effective August 27, citing India’s imports of Russian crude. Additionally, the European Union has imposed sanctions on Indian private refiner Nayara Energy, backed by Russia’s Rosneft.
Although Indian refiners initially paused their Russian oil imports, officials from state-run Indian Oil and Bharat Petroleum have resumed purchases for September and October deliveries after the discounts on Russian crude increased.
Where’s crude oil prices headed?
According to Rahul Kalantri, VP Commodities, Mehta Equities Ltd, crude oil prices showed sharp volatility but managed to recover from multi-month lows.
“ The higher-than-expected drawdown highlighted signs of demand revival, encouraging buying in the market. In addition, ongoing Western sanctions on Russian crude provided a supportive backdrop for prices. We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $62.35-61.80 and resistance is at $63.45-64.05 in today’s session. In INR crude oil has support at Rs5,420,-5,360 while resistance at Rs5,540-5,600,” Kalantri said.
(With inputs from Reuters)
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