Crude oil prices slipped on Friday as investors turned their focus to an upcoming meeting between U.S. President Donald Trump and Russian President Vladimir Putin.
Market watchers believe the talks could potentially pave the way for the relaxation of sanctions imposed on Moscow due to the war in Ukraine.
Brent crude futures on Friday morning were down 49 cents, or 0.7%, trading at $66.35 a barrel. U.S. West Texas Intermediate (WTI) crude futures also dropped, falling 58 cents, or 0.9%, to $63.38 per barrel.
The leaders are scheduled to meet in Alaska, with discussions on securing a ceasefire in Ukraine taking priority. Trump has expressed optimism that Russia is ready to end hostilities, but has warned of imposing additional sanctions on countries that purchase Russian oil if peace negotiations fail to produce results.
“The market is watching out for whether there is a ceasefire or not. An expectation of a ceasefire translates into more Russian production,” Reuters quoted UBS commodities analyst Giovanni Staunovo. “The question is will there be escalation or de-escalation?”
For the week, WTI is on track to record a 0.7% loss, while Brent is set for a 0.4% gain.
Adding pressure to the market, new economic data from China revealed slower growth in industrial production and retail sales, raising concerns over fuel demand. The figures showed that factory output grew at its slowest pace in eight months, and retail sales expanded at their weakest rate since December.
Although China’s refinery throughput in July was up 8.9% year-on-year, it dropped compared to June, which saw the highest levels since September 2023. The rise in refined product exports suggests weaker domestic fuel consumption.
Market sentiment was further weighed down by projections of a larger-than-expected global oil surplus and expectations that U.S. interest rates may remain elevated for a prolonged period.
On Thursday, Bank of America analysts expanded their forecast for excess supply in the oil market, citing higher production from OPEC+ members, including Russia and other allied producers. The bank now predicts an average surplus of 890,000 barrels per day between July 2025 and June 2026.
This projection came just days after the International Energy Agency described the oil market as “bloated” following fresh increases in OPEC+ output.
