- WTI price declines to $63.95 in Friday’s early European session.
- Anticipated lower US demand weighs on the WTI price.
- The ongoing Russia-Ukraine conflict heightened concerns about supply disruptions.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.95 during the early European trading hours on Friday. The WTI loses ground amid expectations of lower demand in the United States (US). Meanwhile, oil traders await further developments surrounding the Russia-Ukraine peace talks.
Oil demand concerns might weigh on the black gold. The summer driving season in the US ends on Monday with the Labor Day vacation, indicating lower gasoline consumption in the coming months. Furthermore, producers are gradually bringing more barrels to the market as voluntary output cuts expire, raising expectations of increased supply.
“Concerns that U.S. fuel demand will ease as the driving season ends after the Labor Day holiday weighed on the market,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
On the other hand, markets continue to weigh the uncertainty surrounding the stability and availability of Russian supply. Reuters reported that Russia launched missile and drone attacks on Ukraine on Thursday, resulting in the deaths of at least 21 people in Kyiv. Meanwhile, the Ukrainian military said it used drones to hit two Russian oil refineries overnight. The persistent Russia-Ukraine conflict has raised concerns that the US may respond with tighter sanctions. This, in turn, might lift the WTI price in the near term.
A larger-than-expected crude oil inventory decrease last week could underpin the WTI price. Data released by the US Energy Information Administration (EIA) on Wednesday showed that crude oil stockpiles in the US for the week ending August 22 fell 2.392 million barrels, compared to a decline of 6.014 million barrels in the previous week. The market consensus estimated that stocks would decrease by 2.0 million barrels.
