Oil Balances Fed Cut, Russia Rule Shift, and Ukraine Strikes - WTI $63.39, Brent $67.32:

Russia’s Budget Rule Reshaped for Oil Stability

Russia is restructuring how it manages oil revenue, with Finance Minister Anton Siluanov confirming that the cut-off price for Urals crude under the budget rule will be lowered by $1 each year, reaching $55 a barrel by 2030 from today’s $60. This move aims to protect fiscal reserves against sanctions and price swings. Moscow plans to tap 447 billion rubles ($5.39 billion) from its National Wealth Fund in 2025 to cover a budget deficit projected at 1.7% of GDP. The reserve currently holds 4 trillion rubles ($48.25 billion). The government expects Urals crude to average $69.70 a barrel in 2025, with the energy sector’s share of the federal budget reduced to 22% from 25%.

Drone Strikes on Russian Refineries Intensify Pressure

Ukraine escalated its campaign with drone attacks on Russian energy assets, striking the Gazprom Neftekhim Salavat complex in Bashkortostan, more than 1,300 kilometers from Ukrainian-controlled territory. The strikes disrupted storage facilities and highlighted Kyiv’s strategy to directly undermine Russian oil revenue. Despite the attacks, Russia’s August oil product exports climbed 8.9% month-over-month to 9.44 million metric tons. Baltic ports led the surge with a 12.3% increase to 5.33 million tons, while Far East flows rose 13.5%. Yet, revenues collapsed, with the International Energy Agency estimating Moscow’s oil income at just $13.5 billion for August, among the lowest since the invasion began.

WTI (CL=F) and Brent (BZ=F) React to U.S. Fed and Economic Concerns

WTI crude slipped 1.0% to $63.39 a barrel, while Brent crude fell 0.9% to $67.32 as traders balanced U.S. Federal Reserve policy shifts with slowing demand indicators. The Fed cut rates by 25 basis points and signaled further easing ahead, aiming to counter weaker labor market data and a collapse in housing starts. Lower borrowing costs typically boost oil demand, but persistent oversupply remains a drag. U.S. crude stockpiles fell sharply as net imports hit record lows and exports surged to a two-year high. However, distillate inventories unexpectedly jumped 4 million barrels, raising concerns about sluggish consumption.

Geopolitical Risk and Supply Shocks Drive Volatility

Sanctions and military conflict continue to dominate oil price risk. President Trump pledged “major sanctions on Russia” pending NATO alignment, a move that could choke Russian exports further. Transneft, Russia’s pipeline monopoly, has already warned of potential cuts to output after repeated drone attacks on export hubs. Meanwhile, Middle East tensions add to volatility. Israel launched strikes on Hezbollah positions in Lebanon, while Qatar increased the term price for al-Shaheen crude to its highest in eight months. Kuwait’s oil minister Tariq Al-Roumi sees rising Asian demand post-Fed rate cut, reinforcing OPEC expectations of tighter balances into year-end.

Technical Picture for WTI and Brent Crude

WTI (CL=F) found support near $61.30 and is consolidating below resistance at $65.65. A breakout above this level could send prices toward $68.40 or even $72.00, while a drop below support opens downside risk toward $59.35. The RSI sits around neutral, pointing to indecision after escaping a multi-month descending triangle. Brent (BZ=F) remains capped near $69, with upside potential to $70.14 (200-day EMA) if resistance breaks. Both benchmarks continue to trade within consolidation zones, reflecting the tug-of-war between bearish economic signals and bullish supply risks.

Verdict: Oil Holds in Balance Amid Conflicting Forces

With WTI near $63.39 and Brent at $67.32, the market remains caught between tightening U.S. inventories, Asian demand prospects, and mounting geopolitical risks on one side, and sluggish U.S. growth and rising distillate stocks on the other. The bias leans cautiously bullish as supply disruptions and sanctions pressure Moscow, but the upside path requires confirmation above technical resistance levels. At present, the market favors a Hold stance—WTI and Brent consolidation reflects fragile equilibrium where a breakout could follow if geopolitical shocks intensify or Fed easing boosts demand more decisively.

That's TradingNEWS