Oil Rebounds As India Tariffs Prove No Match Against Declining U.S. Crude Stocks

Analysts anticipate a busy holiday weekend of travel in the U.S.: File Image/Pixabay

Despite concerns over U.S. president Donald Trump imposing a 50 percent tariff against India for buying Russian oil, crude prices on Wednesday reversed course and eked out modest gains, based mainly on a stock draw in the U.S.

Brent settled up 83 cents at $68.05 per barrel, and West Texas Intermediate settled up 90 cents to $64.15.

The Energy Information Administration reported that U.S. crude inventories dropped by 2.4 million barrels to 418.3 million barrels last week, and gasoline stocks fell by 1.2 million barrels; distillate stockpiles, which include diesel and heating oil, fell by 1.8 million barrels.

Phil Flynn, senior market analyst with Price Futures Group Inc., suggested that this indicates people are getting ready to travel over the Labour Day weekend: "This is the crescendo of the summer driving season, also the last big hurrah for the summertime gasoline blend."

As for India's tariffs, that country's finance minster said the immediate impact of them was limited – but that potential damages to the economy would have to soon be addressed.

Sprague on Wednesday noted that, "The crude market is seen remaining range bound as traders remain unwilling to commit themselves to either direction as they await further developments surrounding the war in Ukraine and the potential disruption in Russian supplies."

The only development in the Russia/Ukraine conflict, despite massive efforts by Washington to broker a peace deal, was further escalation: Russia launched a massive drone attack on energy and gas transport infrastructure in six Ukrainian regions overnight, in retaliation for Ukraine recently attacking Russian refineries and exporting infrastructure.

In other oil news on Wednesday, Kazakhstan's energy minister Yerlan Akkenzhenov told media that his country is in discussions to resume crude oil exports via the Baku-Tbilisi-Ceyhan (BTC) pipeline to the Turkish Mediterranean coast after supply was interrupted last month due to organic chlorides found in Azeri oil.

The clean-up of the pipeline was nearing completion last week.