President Trump’s deadline for Russia to strike a peace deal with Ukraine passed without stricter US sanctions imposed on Moscow. This likely contributed to the recent weakness in crude oil prices, with Brent trading at its lowest levels since early June, ING's commodity experts Ewa Manthey and Warren Patterson note.

Speculators are bearish towards the oil market

"The market is focused on Trump’s meeting with President Putin on Friday – and whether any progress towards a peace deal can be made. But with Russia demanding that Ukraine cede occupied territory to end the war, it’s difficult to see a quick solution. It’s unlikely that Ukraine will agree to give up its own territory. If we do see some level of de-escalation, it would remove sanction risk from the oil market. This would likely drive prices lower, given the bearish fundamentals."

"The latest positioning data shows that speculators are bearish towards the oil market, despite the sanctions and secondary tariff risks. Speculators reduced their net long in ICE Brent by 20,375 lots over the last reporting week to 240,977 lots as of last Tuesday. This was a move predominantly driven by longs liquidating. Meanwhile, it was unsurprising to see that speculators reduced their net long in ICE Gasoil by 14,637 lots over the week to 86,007 lots. The ICE gasoil market has seen some weakness more recently, with both the crack and timespreads edging lower."

"The US oil rig count saw its first weekly increase since April, increasing by one to 411 active rigs last week, according to Baker Hughes data. Rig activity has declined significantly in recent months amid price weakness and the bearish market outlook. However, more recent price stability helped to slow the decline in the rig count."