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Oil prices continued to rise on Thursday, supported by a larger-than-expected decline in U.S. crude inventories, signaling strong demand from the world’s largest oil consumer.
Brent crude futures rose 0.5% to $85.49 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.8% to $83.54, both building on gains from the previous session.
The U.S. Energy Information Administration (EIA) reported a 4.9 million barrel decrease in crude inventories last week, surpassing analyst forecasts of a 30,000 barrel decline and exceeding the 4.4 million barrel drop reported by the American Petroleum Institute.
Analysts attribute this surge in demand to several factors, including hopes of the Federal Reserve easing interest rates, which could stimulate economic growth, and the ongoing summer travel season in the U.S.
The prospect of interest rate cuts in both the U.S. and Europe in the coming months further bolstered the market. Federal Reserve officials indicated that the central bank is nearing a potential rate cut in September due to improving inflation and a more balanced labor market.
Meanwhile, the European Central Bank is expected to maintain interest rates on Thursday but has signaled a possible future rate cut.
Investors are also eagerly awaiting policy announcements from a leadership gathering in China, set to conclude on Thursday.
Additionally, the weakening U.S. dollar has contributed to higher oil prices, as it makes dollar-priced commodities more affordable for buyers using other currencies.
Overall, the combination of strong U.S. demand, expectations of monetary policy easing, and a weaker dollar has propelled oil prices higher, offsetting earlier concerns about slowing global growth and Chinese demand.
