Oil prices climbed on Thursday as crude inventories decreased following increased processing by US refineries and a reduction in gasoline inventories, indicating heightened demand.
Brent futures advanced by 35 cents, or 0.4%, to $85.43 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 36 cents, or 0.5%, reaching $82.47 per barrel.
US crude inventories declined by 3.4 million barrels to 445.1 million barrels during the week ending July 5, surpassing analysts’ expectations from a Reuters poll, which had anticipated a drawdown of 1.3 million barrels.
Gasoline stocks saw a significant decline of 2 million barrels to 229.7 million barrels, much larger than the anticipated draw of 600,000 barrels during the U.S. Fourth of July holiday week.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its outlook for robust growth in global oil demand through 2024 and into the following year. OPEC stated on Wednesday that strong economic growth and increased air travel would support fuel consumption during the summer season.
However, gains in oil prices were limited due to minimal supply disruptions at refineries and offshore production facilities from hurricane Beryl.
Meanwhile, this week’s U.S. inflation data includes the Consumer Price Index scheduled for Thursday and the Producer Price Index report on Friday, both of which could influence market sentiment.
Expectations of a 25-basis-point rate cut by September rose to 74% from approximately 70% on Tuesday and 45% a month earlier, according to CME’s FedWatch.
Reduced interest rates lower borrowing costs, potentially stimulating economic activity and increasing oil demand.
Federal Reserve Chair Jerome Powell stated on Wednesday that the US central bank will adjust interest rates “when and as” necessary, rebutting suggestions that a rate cut in September could be perceived as a political move ahead of the upcoming presidential election in the fall.
