Crude Oil Rises Amid US Inventory Drop, Sanctions On India

(RTTNews) - Crude oil increased on Thursday amid the heightening Russia-Ukraine conflict despite the US efforts to broker a peace deal, a drop in US crude inventories and with traders monitoring India's response to US sanctions.

WTI Crude oil for October delivery was last seen trading up by $0.42 (or 0.65%) at $64.57 per barrel.

With the upcoming US Labor Day weekend deemed to be the unofficial end of the summer driving season, traders are predicting the beginning of low gas demand in the US.

On the geopolitical front, the diplomatic efforts by US President Donald Trump to bring the three-year-plus Russia-Ukraine war to an end have so for been unproductive.

Russia has pushed back on the idea that a summit between the presidents of Russia and Ukraine for peace talks would take place sooner.

Further, in an overnight aerial attack, Russia bombarded Ukraine, killing nearly 18 people.

On the tariff front, the stand-off between the US and India on the latter's purchase of Russian oil continues.

To dissuade India from buying Russian oil, the US slapped 25% "penalty tariffs" on top of previous 25% trade tariffs on India, leaving the country to explore alternative options to buy oil. Of the 5.4 million barrels per day of crude oil imports, India buys 36% of the (totaling 1.8 million bpd) from Russia.

Yesterday, US EIA data revealed a sharp drop in the US crude inventories last week.

OPEC+ nations have eased production restrictions and are increasing production in September by 547,000 barrels per day. Non-OPEC producers have boosted output, raising concerns of oversupply in the near term.

Traders are now looking forward to the September 16-17 meeting decision by the US Fed on interest rates.

With slowing US summer demand, the OPEC alliance's oversupply concerns, trade tensions, and geopolitical conflicts and crude oil being a dollar-denominated commodity, tomorrow's data on US PCE price index considered the Fed's preferred measure of inflation could shed more light on the central bank's policy direction which in turn could impact the US dollar .