Oil prices slipped on Thursday as traders balanced signs of tighter U.S. inventories against fresh geopolitical and trade pressures.

By 09:20 ET (13:20 GMT), Brent futures for October delivery were down 0.2% at $67.28 a barrel, while West Texas Intermediate (WTI) fell 0.3% to $63.99 a barrel.

U.S. inventories show stronger drawdown

The Energy Information Administration (EIA) reported that U.S. crude stocks dropped by 2.4 million barrels for the week ending August 22, a bigger decline than the 1.9 million barrels forecast. Gasoline inventories fell by 1.2 million barrels, while distillate stocks were down by 1.8 million.

Implied gasoline demand rose to 9.24 million barrels per day from 8.84 million the prior week, signalling strong end-of-summer travel activity. That helped confirm seasonal strength in consumption, but also stirred concerns about what happens when peak driving demand fades. Refiners could face weaker margins if consumption dips, leaving crude prices vulnerable to softer demand ahead.

Normally, a bigger-than-expected draw would support prices, but traders appeared cautious, keeping the focus on risks that demand could taper in the weeks ahead.

Impact of U.S. tariffs on India

Prices also softened as markets digested the latest U.S. tariffs on India. Starting August 27, duties on Indian imports doubled to 50%. The move, tied to India’s purchases of Russian crude, is aimed at increasing pressure on New Delhi to curb its energy ties with Moscow.

Indian refiners briefly scaled back Russian purchases after earlier secondary tariffs were imposed but quickly resumed, suggesting flows remain resilient despite the added cost. Analysts now expect the market to closely monitor whether higher tariffs have a longer-lasting impact on trade flows.

The Ukraine conflict continues to hang over energy markets. U.S. President Donald Trump recently warned Moscow of further sanctions if no progress is made toward peace within two weeks, even as he positions himself as a mediator.

Adding to the mix, U.S. growth data came in stronger than expected. GDP expanded 3.3% in the second quarter, above the earlier estimate of 3.0%. The stronger data underscores the resilience of the U.S. economy, even after a small contraction in the first quarter.

The numbers will feed into the Federal Reserve’s September policy meeting, along with Friday’s PCE inflation report and next week’s jobs data. Rate cut expectations rose after Fed Governor John Williams said on Wednesday that “every meeting is live,” suggesting officials remain open to easing policy if needed.

Traders are juggling conflicting signals—tight U.S. supplies, new tariffs against India, geopolitical risks, and shifting Fed expectations. While inventories hint at near-term strength, demand risks and global politics continue to cap oil’s upside.