Oil prices were stable on Thursday as investors weighed the potential impact of Friday's U.S.-Russia summit on Ukraine on Russian crude flows, after U.S. President Donald Trump warned of "severe consequences" for Russia if it does not agree to peace.

Brent crude futures were up 35 cents, or 0.53%, at $65.98 a barrel by 0957 GMT, while U.S. West Texas Intermediate crude futures were 35 cents, or 0.56%, higher at $63.00.

Both contracts hit their lowest in two months on Wednesday after bearish supply guidance from the U.S. government and the International Energy Agency (IEA).

Trump on Wednesday threatened "severe consequences" if Putin does not agree to peace in Ukraine. He did not specify what the consequences could be, but he has warned of economic sanctions if the meeting in Alaska on Friday proves fruitless.

The U.S. president has threatened to enact secondary tariffs on buyers of Russian crude, primarily China and India, if Russia continues with its war in Ukraine.

"The uncertainty of U.S.-Russia peace talks continues to add a bullish risk premium given Russian oil buyers could face more economic pressure," Rystad Energy said in a client note.

"How (the) Ukraine-Russia crisis resolves and Russia flows change could bring some unexpected surprises."

However, some analysts remained sceptical that Trump would take action that could significantly disrupt oil supplies.

"Anything that causes oil prices to rise from policy such as secondary tariffs is almost an own goal against this administration, and the man from Moscow knows it," PVM analyst John Evans said.

Expectations the U.S. Federal Reserve will cut rates in September also propped up oil prices, as lower borrowing rates can spur economic growth and in turn demand for oil.

Traders are almost 100% agreed a cut will happen after U.S. inflation increased at a moderate pace in July.

Treasury Secretary Scott Bessent said he thought an aggressive half-point cut was possible given recent weak employment numbers.

Oil prices were kept in check on Wednesday as crude inventories in the United States unexpectedly rose by 3 million barrels in the week ending August 8, according to the U.S. Energy Information Administration on Wednesday. [EIA/S]

Source: Investing.com