Oil Prices Surge Amid Potential Replenishment of US Strategic Reserve

Oil prices climbed on Thursday as the United States is anticipated to initiate crude purchases to replenish its reserves, following a slump to a seven-week low. This comes alongside optimism for a ceasefire in the Gaza Strip, increasing American stockpiles, and uncertainty regarding a potential interest rate cut by the US Federal Reserve.

After three consecutive days of decline, Brent crude futures for July delivery edged up by 21 cents, or 0.3 percent, reaching $83.65 per barrel by 0026 GMT. Similarly, US West Texas Intermediate crude for June delivery rose by 22 cents, or 0.3 percent, reaching $79.22 per barrel.

Both benchmarks experienced a drop of over three percent on Wednesday, hitting their lowest levels in seven weeks.

The US aims to replenish its strategic oil reserves following a historic drawdown from emergency stocks in 2022, targeting purchases at or below $79 per barrel.

There is growing anticipation in the Middle East for a potential ceasefire agreement between Israel and Hamas amid renewed efforts led by Egypt.

However, Israeli Prime Minister Benjamin Netanyahu has vowed to proceed with an attack on the city of Rafah in southern Gaza, despite opposition from the United States and warnings from the United Nations of potential tragedy.

The US Energy Information Administration reported a significant increase in crude inventories, rising by 7.3 million barrels to 460.9 million barrels in the week ending April 26, contrary to analysts’ expectations of a 1.1 million barrel decline.

This surge in inventories marks their highest level since June.

Meanwhile, the US Federal Reserve made its decision on interest rates on Wednesday.