By Frank Walbaum, Market Analyst at Naga
Crude oil held steady in early Friday trading after two days of rebound, as the market weighed hopes for a Russia-Ukraine peace deal against lingering obstacles to negotiations. The lack of progress on a Putin-Zelenskiy summit and on security guarantees reinforced expectations of prolonged conflict and potentially tougher US sanctions, adding a risk premium that could reverse part of the recent weeks’ decline.
Meanwhile, the market could continue to find support after US inventory data showed large drawdowns. API crude inventories fell by 2.4 million barrels in the week ending August 15, reversing the prior week’s build, while EIA declined by 6 million barrels, suggesting stronger demand. The market is also awaiting the OPEC+ meeting on September 7 for guidance on production by the organisation’s members.
Looking ahead, attention is also on the Jackson Hole conference for clues on possible Federal Reserve rate cuts, which could support growth and oil demand.