By Osama Al Saifi, Managing Director for MENA at Traze.com
Crude oil futures rebounded to a certain extent, supported by the decline in US inventories. The latter fell sharply in the week ending August 15, with the EIA reporting a 6.014-million-barrel decline, well beyond expectations. API data also indicated tighter conditions, showing a 2.4-million-barrel drop, pointing to stronger demand fundamentals that could support global crude prices amid robust US consumption.
Meanwhile, traders could continue to monitor the developments in the peace talks between the US, the EU, Ukraine and Russia. Any positive progress could see a potential lift in sanctions against Russia, leading to more Russian crude arriving on the market, pushing prices down. However, if the talks come to a dead end, the markets could find support as new sanctions could make it harder for Russia to supply its current buyers.
Looking ahead, market participants await OPEC’s September 7 meeting for further guidance on their production policy. Following the August 3 review, the group confirmed a September adjustment of 547,000 barrels per day, which could add some pressure on prices. OPEC emphasized flexibility to pause or reverse its policy decisions to compensate for any overproduction. A shift in policy direction could support the market.