Morning Highlights: Oil rises on U.S. stock draw, peace talks waiting for next steps

Wednesday, August 20, 2025

Oil rebounded Wednesday after API industry data showed a larger-than-expected U.S. crude draw, offsetting lingering doubts over prospects for a Ukraine peace deal. Markets remain caught between supply support from geopolitics and bearish signals tied to diplomacy.

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Market Snapshot (as of 06:00 EST):

• Brent (Oct): $66.34 (▲$0.55 / +0.8%)

• WTI (Oct): $62.30 (▲$0.53 / +0.9%)

Prices snapped back after falling more than 1% Tuesday on optimism of progress in peace talks.

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API Reports U.S. Stock Draw

The API reported crude inventories fell by 2.42 million barrels last week, ahead of today’s official EIA release. Analysts had expected a smaller decline.

“The API report was on the positive side, so I assume some price support is coming from that,” said UBS’s Giovanni Staunovo.

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Trump-Putin-Zelenskiy Meeting Uncertain

President Trump continues to push for a trilateral summit with Putin and Zelenskiy, but Russia has yet to confirm its participation.

• Trump conceded Putin “might not want to make a deal.”

• ANZ’s Daniel Hynes: “The likelihood of a quick resolution now seems unlikely.”

Markets remain volatile, swinging between hopes for diplomacy and renewed skepticism.

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Refinery Flood Adds Support

BP said operations at its 440,000 bpd Whiting, Indiana refinery—a key Midwest supplier—were disrupted by flooding. The incident adds short-term price support as product output may decline.

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India Resumes Russian Crude Purchases

Indian refiners IOC and Bharat Petroleum resumed buying discounted Russian grades (Urals, Varandey, Siberian Light) for Sept–Oct delivery.

• Discounts widened to ~$3/bbl, reviving demand.

• India had paused purchases in July under U.S. criticism.

• Trump has threatened a 25% levy on Indian goods from Aug 27 if Russian crude buying continues.

The shift could tighten supply for China, which had stepped up Russian oil imports during India’s absence.

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Norway Beats Oil Output Forecasts

Norwegian crude output rose to 1.96m bpd in July, beating forecasts of 1.81m bpd and up from 1.83m bpd last year.

• Gas output fell YoY but still exceeded expectations.

• Norway remains Europe’s largest gas supplier.

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Druzhba Pipeline Restored

Flows to Hungary and Slovakia resumed after Monday’s Ukrainian strike on the Druzhba pipeline.

• Slovak Economy Minister: impact “minimal.”

• Hungary’s FM Szijjarto thanked Moscow for swift repairs, while blaming Ukraine for “outrageous” attacks on energy security.

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Outlook: Choppy Trade Ahead

• Bullish drivers: U.S. stock draw, Midwest refinery disruption, resilient demand in Asia.

• Bearish drivers: Uncertain diplomacy, risk of sanctions relief, resumption of Russian flows to CEE.

“Oil prices seem to be thrown down one day, rebounding the next,” said UBS’s Staunovo. Traders remain cautious as conflicting drivers keep prices range-bound.