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Oil prices rise 2% amid anticipation of Alaska summit and expectations of US interest rate cut
Oil prices rose about 2% during trading on Thursday, August 14, at the settlement, reaching their highest levels in a week. This was after US President Donald Trump threatened "serious consequences" if his talks with his Russian counterpart, Vladimir Putin, failed, and amid expectations of increased demand for crude oil if the US Federal Reserve cuts interest rates in September.
A lower interest rate lowers consumer borrowing costs and could boost economic growth and oil demand with increased consumption.
Brent crude futures rose $1.21, or 1.84%, to $66.84 per barrel at the settlement.
US crude futures rose $1.31, or 2.09%, to settle at $63.96 per barrel.
These gains pushed both benchmarks out of technical oversold territory for the first time in three days, and pushed Brent to its highest settlement since August 6.
This comes after Brent crude fell on Wednesday to its lowest settlement since June 5, while US crude fell to its lowest settlement since June 2, also due in part to lower inventories and supplies, according to data from the US Energy Information Administration and the International Energy Agency.
On Thursday, the Russian president praised what he called the "sincere efforts" made by the United States to end the Russia-Ukraine war. Putin raised the possibility of a new nuclear arms agreement before the Alaska summit scheduled for Friday with the US president, while the US's European allies urged Trump to stand his ground.
On Wednesday, the US president threatened "serious consequences" if his Russian counterpart did not agree to a peace agreement in Ukraine, but he did not specify what those consequences would be.
Meanwhile, Rystad Energy said in a note to clients: "Uncertainty surrounding the US-Russia peace talks continues to add an upside risk premium, as buyers of Russian oil may face further economic pressure."
Also, the near-certainty that the US Federal Reserve will cut interest rates at its meeting next month, following a moderate rise in inflation last month, provides further support for oil prices.
