Oil prices closed down nearly $1 on Friday as traders awaited talks between U.S. President Donald Trump and Russian leader Vladimir Putin, which could lead to an easing of the sanctions imposed on Moscow over the war in Ukraine.

Brent crude futures settled 99 cents, or 1.5%, lower at $65.85 a barrel, while U.S. West Texas Intermediate crude futures eased $1.16, or 1.8%, lower at $62.80.

Trump arrived in Alaska on Friday for his summit with Putin after saying he wants to see a ceasefire in the war in Ukraine "today."

Trump has said he believes Russia is prepared to end the war, but he has also threatened to impose secondary sanctions on countries that buy Russian oil if there is no progress with peace talks.

Putin also arrived in Anchorage. Kremlin spokesman Dmitry Peskov said Russia expects the talks to bring results, Russia's Interfax news agency reported.

"President Trump will likely threaten further tariff pressure on India and possibly China as far as oil imports from Russia if the meeting stalemates, which is keeping a nervous trade to crude," said Dennis Kissler, senior vice president of trading at BOK Financial.

"If a ceasefire announcement is made, it will be taken as a negative to crude near-term," Kissler added.

For the week, WTI dropped 1.7%, while Brent eased 1.1%.

Weaker economic data from China, meanwhile, raised concerns over fuel demand.

Chinese government data showed factory output growth slumped to an eight-month low and retail sales growth expanded at its slowest pace since December, weighing on sentiment despite stronger oil throughput in the world's second-largest crude user.

Throughput at Chinese refineries rose 8.9% year-on-year in July, but that was down from June levels, which were the highest since September 2023. Despite the increase, China's oil product exports last month were also up from a year ago, suggesting lower domestic fuel demand.

Forecasts of a growing oil market surplus also weighed on sentiment, as did the prospect of higher-for-longer U.S. interest rates.

Oil rig count, an indicator of future supply, rose by one to 412 this week, Baker Hughes data showed.

Bank of America analysts said on Thursday that they were widening their forecast for the oil market surplus, citing growing supplies from the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies.

Source: Investing.com