Oil prices experienced a modest increase on Thursday, recovering from a decline observed in the prior session. The anticipated meeting between U.S. President Donald Trump and Russian President Vladimir Putin has contributed to an elevation in risk premiums within the market. Brent crude futures experienced an increase of 28 cents, translating to a 0.43% rise, reaching $65.91 per barrel at 0057 GMT. Concurrently, U.S. West Texas Intermediate crude futures saw an uptick of 23 cents, or 0.37%, bringing the price to $62.89.

Both contracts reached their lowest levels in two months on Wednesday, following pessimistic supply forecasts from the U.S. government and the International Energy Agency (IEA). On Wednesday, Trump issued a warning of “severe consequences” should Putin fail to reach an agreement for peace in Ukraine. Trump did not delineate the potential repercussions, yet he has cautioned about the imposition of economic sanctions should the forthcoming meeting in Alaska on Friday yield no productive outcomes.

“The uncertainty surrounding U.S.-Russia peace talks persists, contributing to a bullish risk premium, as Russian oil buyers may encounter increased economic pressure,” Rystad Energy stated in a client note. “The resolution of the Ukraine-Russia crisis and subsequent changes in Russian flows may yield some unforeseen outcomes.”
Another support for oil is the expectation that the U.S. Federal Reserve will cut rates in September, which is nearly certain following the moderate pace of U.S. inflation increase in July.

Treasury Secretary Scott Bessent expressed the view that an aggressive half-point cut could be on the table in light of the recent disappointing employment figures. The probability of a quarter-percentage point cut at the Federal Reserve’s meeting on September 16-17 is assessed at 99.9%, as indicated by the CME FedWatch tool.
Reduced borrowing costs would stimulate demand for oil. On Thursday, the dollar was positioned close to multi-week lows relative to the euro and sterling, as market participants increased their expectations for the Federal Reserve to initiate interest rate cuts in the upcoming month.

Oil prices remained stable as crude inventories in the United States saw an unexpected increase of 3 million barrels for the week ending August 8, as reported by the U.S. Energy Information Administration on Wednesday. This contrasted with the expectations set by a Reuters poll, which anticipated a draw of 275,000 barrels. [EIA/S]

Additionally, a forecast from the International Energy Agency indicated that global oil supply in 2025 and 2026 would increase at a pace exceeding prior expectations, as the Organization of the Petroleum Exporting Countries and its allies, collectively referred to as OPEC+, expand their output alongside rising production from non-member sources.