As Traders Focus on Supplies and the Fed's Fallout, Oil Holds Advance

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Crude prices stabilized Monday following a strong weekly advance, as traders monitored supply concerns and broader market sentiment after the Federal Reserve hinted at an upcoming shift toward interest-rate cuts.

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Brent crude hovered near $68 a barrel after climbing nearly 3% last week, while West Texas Intermediate (WTI) held above $63. The geopolitical backdrop remains tense, with the U.S. threatening to double tariffs on all Indian imports to 50% in response to India’s ongoing purchases of Russian oil. Despite Washington’s warning with the measure expected to take effect Wednesday Indian officials indicated that refiners would continue sourcing crude from Moscow.

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Broader risk assets, including commodities, could maintain momentum this week after Fed Chair Jerome Powell signaled in his Friday remarks that rate cuts may resume as early as next month. Lower borrowing costs generally stimulate economic growth and weaken the U.S. dollar both factors that tend to support crude prices.

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“Crude is positioned to benefit from a softer dollar and improved risk sentiment,” noted analysts, pointing out that Powell’s comments helped fuel optimism across equity and commodity markets heading into the new week.

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Global benchmark Brent has consistently settled in the $60 range throughout August, as investors weigh several competing forces: disruptions to Russian exports, ongoing diplomatic efforts to end the conflict in Ukraine, and the drag from a U.S.-led trade war.

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Despite recent strength, futures remain about 9% lower year-to-date amid concerns of oversupply in the coming quarters. The OPEC+ alliance recently restarted a significant portion of previously idled output, raising fears that additional barrels could flood the market.

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Analysts caution that while geopolitical tensions can lend short-term support to oil prices, the supply-demand equation remains fragile. A prolonged trade war and slowing global growth could cap any sustained rally.

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Market activity may be subdued at the start of the week, with trading volumes in Brent futures likely to dip as some participants take time off for a public holiday in the United Kingdom. Lower liquidity could contribute to increased price swings if unexpected headlines hit during the session.

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