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ANS price retreats
Traders question impact of secondary tariffs on buyers of Russian crude
Steve Sutherlin Petroleum News
Alaska North Slope crude slipped below $70 Aug. 5 -- off $1.10 to close at $69.75 per barrel. It was the first foray into the $60s for the Alaskan benchmark since its June 5 close of $68.98. West Texas Intermediate dropped $1.06 Aug. 5 to close at $65.23, and Brent dropped $1.08 to close at $67.68.
The fall for ANS from the mid-$70s was swift. In the five trading days leading to Aug. 5, ANS dove $5.82 from its July 29 close of $75.57 to $69.75 Aug. 5.
Worries over demand resiliency coupled with a production boost by members of the Organization of the Petroleum Exporting Countries and its allied exporters put pressure on prices.
Crude's losses continued Aug. 6. WTI fell 81 cents to close at $64.35, and Brent fell 75 cents to close at $66.89, both notching a fifth straight session of losses.
The specter of higher U.S. tariffs on India for buying Russian crude, and a drawdown of U.S. crude stocks were not enough to overcome the downward momentum.
"All the crude oil moving pieces were bullish in today's report," Mizuho analyst Robert Yawger said in a note quoted in an Aug. 6 update by Dow Jones Newswires.
Yawger said the additional 25% tariff on Indian goods is due to start in 21 days, which "allows some wiggle room for three-way negotiations between Russia, India and the U.S. that could possibly keep the oil flowing."
Whether India continues to purchase Russian oil is key, ING said in an Aug. 7 note, adding, "Reducing or stopping Russian oil purchases makes more sense."
"Countries facing this potential secondary tariff must weigh the benefits of buying discounted Russian crude against the potential cost to trade with the U.S.," ING said. Indian exports to the United States total $87 billion, while India's savings from purchasing discounted Russian crude are "in the region of $6 billion."
If India stops buying Russian oil and Russia is unable to divert supply to other buyers, it puts as much as 1.7 million barrels of supply at risk, ING said.
"This would wipe out the surplus that we expect over the next three quarters and leave the market largely balanced, assuming OPEC+ doesn't bring the next tranche of supply cuts back onto the market," ING said. "If these tariffs stick, it could see Brent averaging around $75 per barrel over 2026, compared to our base case forecast of $57."
Futures slid lower on a New York Times report that President Trump will meet in person with Russian President Vladimir Putin over the next week or so, and follow it up with a meeting between himself, Putin and Ukrainian President Volodymyr Zelenskiy.
U.S. special envoy Steve Witkoff met with Putin in Moscow Aug. 6, two days before a deadline Trump set for Moscow to halt the war in Ukraine, Bloomberg reported.
Russian media reported that the Kremlin called the meeting "constructive," and the two sides exchanged "signals" over the conflict.
"Uncertainty over the outcome of the U.S.-Russia summit, possible additional tariffs on India and China -- key buyers of Russian crude -- and the broader impact of U.S. tariffs on the global economy are prompting investors to stay on the sidelines," Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment told Reuters Aug. 6.
US crude inventories fall U.S. commercial crude oil inventories for the week ended Aug. 1 plunged by 3 million barrels from the previous week to 423.7 million barrels -- 6% below the five-year average for the time of year, the U.S. Energy Information Administration said in its petroleum report Aug. 6.
Analysts answering a Reuters poll had projected a 591,000-barrel draw.
Total motor gasoline inventories fell 1.3 million barrels for the period to 227.1 million barrels -- 1% below the five-year average for the time of year, the EIA said. Distillate fuel inventories fell 0.6 million barrels last week to 113.0 million barrels -- 16% below the five-year average for the time of year.
ANS plummeted $2.26 Aug. 4 to close at $70.85, while WTI fell $1.04 to close at $66.29 and Brent fell 91 cents to close at $68.76.
Prices fell sharply across the board Aug. 1. ANS plunged $2.43 to close at $73.10, WTI plunged $1.93 to close at $67.33 and Brent plummeted $2.86 to close at $69.67.
On July 31, ANS fell 87 cents to close at $75.53, WTI fell 74 cents to close at $69.26 and Brent fell 71 cents to close at $72.53.
ANS rose 83 cents July 30 to close at $76.40, as WTI added 79 cents to close at $70.00 and Brent added 73 cents to close at $73.24.
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