Oil holds three-day gain

WTI crude oil futures hovered around $63.5 per barrel on Thursday, consolidating most of a three-day advance as geopolitical risks lifted the market’s risk premium despite mixed demand signals.

Traders remained focused on developments in Eastern Europe, where President Donald Trump is expected to issue new remarks on Russia after criticizing Moscow for violating Polish airspace. The incident has heightened speculation over potential US retaliation, including the prospect of tighter energy sanctions that could disrupt global supply flows.

At the same time, Trump’s call for the European Union to impose tariffs on China and India—two of the largest buyers of Russian crude—added to concerns about how energy markets could be weaponized to pressure Moscow into negotiations.

Further upward pressure came from the Middle East, where Israel claimed to have targeted Hamas leadership in Doha. Although the strike and subsequent escalation did not pose immediate threats to energy infrastructure, traders priced in additional geopolitical risk premiums, mindful that tensions in the region can spill into supply disruptions.

However, upside momentum was capped by evidence of softening US demand. The Energy Information Administration reported that crude inventories climbed by 3.9 million barrels last week, far exceeding market forecasts of a modest build.

Gasoline stocks also edged higher, signaling that the summer driving season may be losing steam earlier than expected. Refinery runs remained stable, but slowing product demand pointed to weaker domestic consumption, weighing on the near-term outlook.

Looking ahead, broader macroeconomic conditions could provide a counterweight. Expectations of a dovish shift in US monetary policy, with markets assigning high odds of a September rate cut, have underpinned commodities as investors anticipate looser financial conditions could bolster growth and, by extension, oil demand.

Still, analysts caution that the interplay between demand softness and elevated geopolitical risks will likely drive volatility in the coming weeks, with the balance between inventory builds and supply disruption fears determining the next move in prices.