WTI extends the decline to below $63.50 on potential US-Russia meeting

• WTI price trades in negative territory near $63.20 in Friday’s early Asian session. 

• Officials said Putin would meet Trump in the coming days. 

• US crude stockpiles fell by 3.029 million barrels in the week ending August 1, a bigger-than-expected draw.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.20 during the early Asian trading hours on Friday. The WTI remains on the defensive amid potential US-Russia talks, raising expectations for a diplomatic end to the war in Ukraine.

Kremlin aide Yuri Ushakov said on Thursday that US President Donald Trump and Russian President Vladimir Putin would meet in the coming days in what would be the first summit between leaders of the two countries since 2021. A White House official said that Trump could potentially meet with Putin as early as next week. Possible US-Russia talks regarding the Ukraine conflict have tempered concerns about supply disruptions, which weigh on the WTI price. 

Furthermore, rising oil output might also undermine the WTI. The Organization of Petroleum Exporting Countries and allies (OPEC+) met virtually on Sunday, agreeing to boost oil production by 547K barrels per day (bps) for September. The group began increasing output in April with a modest hike of 138K bpd, followed by larger-than-expected rises of 411K bpd in May, June, and July, 548K bpd in August, and now 547K bpd for September.

"Additional increases in OPEC production remain as the overriding negative consideration, while continued tariff uncertainties are still providing the main argument favoring lower price levels," analysts at energy advisory firm Ritterbusch and Associates said in a note.

On the other hand, a bigger-than-expected draw in US crude inventories last week might help limit the WTI’s losses. The US Energy Information Administration (EIA) Crude Oil Stockpiles report showed crude oil stockpiles in the US for the week ending August 1 fell by 3.029 million barrels, compared to a rise of 7.698 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.1 million barrels.