Oil prices continued to rise on Thursday, following gains made in the previous session, driven by a larger-than-anticipated decrease in U.S. crude stockpiles, which are the largest in the world. Brent futures increased by 32 cents, or 0.4%, reaching $85.40 a barrel at 0340 GMT, while U.S. West Texas Intermediate (WTI) crude saw a rise of 48 cents, or 0.6%, to $83.33. Both contracts had already closed higher on Wednesday. According to the latest data from the U.S. Energy Information Administration, U.S. crude inventories dropped by 4.9 million barrels last week, surpassing the 30,000 barrels decline predicted by analysts in a Reuters poll and the 4.4 million barrels decrease reported by the American Petroleum Institute.
The robust demand indicators from the U.S. are overshadowing concerns about slower growth in China, according to Priyanka Sachdeva, senior market analyst at Phillip Nova. She noted that the anticipation of Federal Reserve easing, which could stimulate economic growth, combined with the ongoing summer travel season in the U.S., is maintaining strong demand for oil from the world's largest economy. The potential for interest rate cuts in the coming months in both the U.S. and Europe is also supporting the market. Federal Reserve officials indicated on Wednesday that the central bank is nearing a decision to cut interest rates, possibly in September, due to improved inflation trends and a more balanced labor market.
Additionally, U.S. economic activity showed slight to modest expansion from late May through early July, although firms anticipate slower growth ahead. The European Central Bank is expected to maintain interest rates at their current level on Thursday but has signaled that a rate cut may be forthcoming. Investors are also watching for policy updates from a major leadership meeting in China, which concludes on Thursday. Meanwhile, the dollar weakened for the third consecutive session, which can increase demand for oil by making dollar-denominated commodities more affordable for holders of other currencies.
