Oil Maintains Five Month Lows As Trump Announces Meeting With Putin

Meanwhile, analysts suspect that the market's bearish sentiment is oversold: File Image/Pixabay

Oil maintained its dubious distinction of settling at five month lows on Thursday – for the third time this week – as U.S. president Donald Trump announced he will soon meet with Russian president Vladimir Putin to discuss ending the war on Ukraine, after a "very productive" phone call between the two leaders.

Brent settled down 85 cents at $61.06 per barrel, and West Texas Intermediate settled down 81 cents at $57.46.

Trump said he expected to meet Putin in Budapest within the next two weeks; the Kremlin described the phone call as "extremely frank and trustful"; for his part, Ukraine president Volodymyr Zelensky theorized that the threat of his country obtaining Tomahawk missiles from Washington had persuaded Moscow to negotiate.

Bloomberg noted that the prospect of an end to the Russia/Ukraine war not only reduced oil traders' supply fears, it came amid pressure on the former Soviet Union's oil infrastructure: "Russian exports of refined fuels have slumped to the lowest since the onset of the war, underscoring continued strain on the country's refineries targeted by drone attacks."

Meanwhile, JPMorgan Chase & Co. analysts in a note Thursday had this to say about the current state of the global oil market: "The softness in oil demand seen in early October persisted into the second week, with both U.S. and Chinese port activity continuing to weaken…In China, the slowdown was largely due to the mid-autumn festival break, while in the U.S., it reflected the end of front-loading and the impact of higher tariffs."

Still, there remains the question of whether demand woes are being oversold by analysts: a U.S. government report showed that while refinery runs were down almost across the board, crude stockpiles at Cushing, Oklahoma, fell to the lowest since July, and product inventories declined.

Giovanni Staunovo, commodity analyst at UBS, called into question the International Energy Agency's recent warning of an oil surplus of 3.2 million barrels per day (bpd) through June, 2026 – news that contributed significantly to oil's bearish trading patterns this week.

Staunovo said oil's price drop this week would have been steeper if traders had taken the IEA's estimate seriously: "Either the market is pricing it completely wrongly or the [estimated] surplus is too elevated…I will believe it is a bit on the elevated side."