Oil Prices Slip as Traders Weigh U.S. Demand Outlook and India’s Response to Tariffs

Oil prices eased on Thursday, retreating from gains in the previous session, as investors balanced signs of softer U.S. fuel demand against geopolitical uncertainty over U.S. tariffs on India.

Brent crude futures fell 50 cents, or 0.73 percent, to $67.55 a barrel at 9:43 a.m. Saudi time. U.S. benchmark West Texas Intermediate (WTI) crude slipped 51 cents, or 0.80 percent, to $63.64. Both contracts had risen on Wednesday after U.S. government data showed a sharper-than-expected drawdown in crude inventories.

The U.S. Energy Information Administration (EIA) reported that crude stockpiles fell by 2.4 million barrels for the week ending August 22, outpacing analysts’ expectations of a 1.9 million-barrel drop, according to a Reuters poll.

“Oil prices are pulling back this morning as traders reassess yesterday’s rally driven by the EIA report,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. While U.S. inventories continued to decline, she noted, the pace of drawdowns had slowed compared to the previous week, “tempering bullish momentum.”

The drawdown suggested steady demand heading into the U.S. Labor Day holiday, which traditionally sees a surge in travel. However, analysts noted that the long weekend also marks the unofficial end of the summer driving season, raising expectations of weaker demand in the weeks ahead. “This typically signals the start of softer consumption patterns,” said Tony Sycamore, market analyst at IG.

Attention is also turning to India, one of the world’s largest oil importers, after U.S. President Donald Trump announced tariffs of up to 50 percent on Indian imports. Washington has pressured New Delhi to reduce purchases of Russian crude, but analysts expect India to continue buying from Moscow in the short term. “This should limit the impact of the new tariffs on global supply,” said Sycamore.

At the same time, rising supply from major producers is weighing on prices. Some members of the OPEC+ alliance have eased voluntary production cuts, offsetting market support from ongoing disruptions linked to the Russia-Ukraine conflict.

On Wednesday, Ukrainian officials said a massive Russian drone assault targeted energy and gas transport infrastructure across six regions, leaving more than 100,000 people without power. The escalation added to concerns about the vulnerability of Europe’s energy system ahead of winter.

Macroeconomic signals also remain in focus. The prospect of a U.S. interest rate cut has offered some support to oil markets, with lower borrowing costs potentially boosting economic activity and fuel demand. John Williams, president of the New York Federal Reserve, said on Wednesday that while rates are expected to fall at some stage, policymakers would wait for fresh economic data before deciding on a move at the Fed’s September 16–17 meeting.

With global supply and demand signals pulling in different directions, analysts say oil markets are likely to remain volatile in the short term.