Oil prices slip as inventories draw, demand outlook mixed

WTI crude edged to $63.79 a barrel and Brent crude to $67.74 as traders weighed a larger-than-expected U.S. stock draw against India’s continued Russian oil imports and Goldman Sachs’ forecast of weaker long-term prices.

Oil markets moved lower on Wednesday, with West Texas Intermediate (WTI) crude settling near $63.79 per barrel and Brent crude trading around $67.74, as investors reassessed global supply-demand dynamics ahead of the end of the U.S. summer driving season. The decline came despite new data from the U.S. Energy Information Administration (EIA) showing stronger-than-expected demand, highlighting the complex pressures facing the market.

EIA Report

The EIA reported a 2.4 million-barrel draw in U.S. crude inventories for the week ending August 22, surpassing analyst expectations and signaling resilient consumption. Gasoline and distillate stocks also fell, reflecting continued travel activity in the run-up to the Labor Day holiday, a peak period for American road fuel demand. Typically, such declines in stockpiles provide support to prices, but the reaction in futures markets remained muted as traders focused on broader uncertainties.

One of those uncertainties is the trajectory of global crude flows, particularly in Asia. India has continued to import discounted Russian oil despite U.S. tariffs designed to discourage such purchases, effectively softening the intended impact of Washington’s sanctions regime on Moscow.

Russia remains heavily reliant on crude exports to sustain its economy during the war in Ukraine, while India has positioned itself as a key buyer willing to defy U.S. pressure in exchange for cheaper energy supplies. The persistence of these flows has tempered bullish sentiment in oil markets, reinforcing expectations of adequate supply.

At the same time, Wall Street analysts have shifted their long-term outlooks. Goldman Sachs warned this week that Brent crude could slide into the low $50s by late 2026, a level not seen since the height of the COVID-19 demand shock in 2020.

The bank cited rising global surpluses and the prospect of weaker demand growth as key drivers of the anticipated decline. Only a significant acceleration in Chinese stockpiling, the bank noted, might provide upward pressure to counterbalance these headwinds. The projection contrasts with the relative stability of current prices, highlighting the divergence between near-term supply tightness and longer-term expectations of oversupply.

Geopolitical Factors

Geopolitical factors continue to inject volatility into the energy market. The ongoing Russia-Ukraine war has disrupted traditional export routes and heightened concerns over supply security in Europe, though recent months have seen crude shipments stabilize through alternative channels. In parallel, Washington’s push to penalize India with tariffs for its Russian imports has added another layer of uncertainty. While the immediate effect on trade volumes has been limited, analysts caution that sustained tariff pressure could alter market flows in the months ahead.

Oil’s subdued response to the EIA data reflects broader caution among traders. Brent and WTI both held within narrow ranges after the report, suggesting that investors remain more focused on structural and geopolitical factors than on weekly fluctuations in U.S. inventories. Market participants are closely watching how demand will evolve after the summer peak, with U.S. driving activity expected to ease and global growth concerns persisting. The balance between strong near-term consumption and looming long-term headwinds has left prices hovering in a relatively tight band.

Historical comparisons offer perspective. During the late summer of 2018, crude inventories also drew down sharply as U.S. demand surged, helping propel WTI above $70 per barrel. In contrast, today’s market has failed to rally meaningfully despite similar signals, underscoring how increased global supply resilience, particularly from non-OPEC producers, has capped upside momentum. Moreover, the memory of the 2020 crash, when Brent briefly fell below $20, continues to shape market psychology, reinforcing caution about overestimating demand strength.

Traders are expected to monitor China’s crude buying closely, given its outsized influence on global balances. If Beijing accelerates purchases to replenish strategic reserves, it could offset some of the downward pressure predicted by analysts. Conversely, a slowdown in Chinese imports would magnify the bearish outlook, particularly if combined with India’s ongoing Russian purchases and OPEC’s limited ability to enforce output cuts. For now, markets appear caught between evidence of robust U.S. consumption and warnings of a longer-term glut.

Gold

Gold, another barometer of market sentiment, was last reported around $3,444 per ounce, though no recent confirmation has been provided. The precious metal’s elevated levels reflect persistent investor caution amid global economic uncertainty and geopolitical risk, conditions that also shape the outlook for crude. In this environment, oil traders remain wary of overcommitting in either direction until clearer demand signals emerge beyond the summer driving season.

As the energy sector transitions from peak seasonal consumption into the final quarter of the year, the interplay between U.S. demand patterns, Indian and Chinese buying strategies, and geopolitical frictions will define price movements. With Brent holding steady at $67.74 and WTI near $63.79, markets remain delicately balanced between tight short-term fundamentals and looming structural challenges, leaving the path forward uncertain but closely watched by analysts and policymakers alike.