By Seher Dareen
LONDON (Reuters) -Oil prices climbed on Wednesday, rebounding from a five-week low the previous day, as traders focused on U.S. President Donald Trump threatening India with higher tariffs over its Russian crude purchases and a larger-than-expected U.S. crude draw.
Brent crude futures gained 90 cents, or 1.3%, to $68.54 a barrel by 0936 GMT, while U.S. West Texas Intermediate crude was up 92 cents, or 1.4%, at $66.08 a barrel.
Both oil contracts fell by more than $1 on Tuesday to settle at their lowest in five weeks, marking a fourth session of losses.
“Oil prices are higher today as traders look to India and China’s response to the threat of secondary sanctions,” said Ashley Kelty, an analyst at Panmure Liberum.
“Expectations appear that India may reduce its buying of Russian crude, but I can’t see them doing so entirely as they have been making supernormal profits on buying cheap Russian crude.”
Trump’s renewed threats on Tuesday of higher tariffs on India for buying Russian energy supported the market. India, along with China, is a huge buyer of Russian oil.
U.S. envoy Steve Witkoff arrived in Moscow on Wednesday on a last-minute mission to seek a breakthrough in the Ukraine war, two days before the expiry of a deadline set by Trump for Russia to agree to peace or face new sanctions.
“Overall, the outlook for the Russia-Ukraine war remains uncertain but the ongoing conflict and the threat of escalating tariffs is likely to keep oil prices supported in the near term until there is more clarity on the potential impact of tariffs on oil exports,” analysts at Roth Capital Markets said in a note late on Tuesday.
“We expect minimal disruption to Russian oil exports as we think that China can import the vast majority of Russian crude.”
The market was also seeing some support from U.S. crude inventories falling last week, analysts said, as sources citing American Petroleum Institute figures said on Tuesday that stockpiles had fallen by 4.2 million barrels.
That compares with a Reuters poll estimate of a 600,000 barrels draw for the week to August 1. [API/S][EIA/S]
“The API data showing a U.S. crude draw yesterday was price supportive,” said Giovanni Staunovo, an analyst at UBS, adding that concerns over supply disruptions from the U.S.-India spat were priced in.
(Reporting by Seher Dareen in London, Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore; Editing by Christian Schmollinger, Stephen Coates, Jane Merriman and Kate Mayberry)
