Oil prices rise amid robust expectations of US demand, interest rate cuts

(MENAFN) Oil prices witnessed an upward trajectory in early Thursday trading, extending the gains initiated in the previous session. This surge was propelled by signs of robust demand in the United States, where data revealed that inflation had risen less than anticipated by the markets. This development bolstered expectations for a reduction in interest rates, potentially stimulating further demand for oil.

Brent crude futures climbed by 42 cents, equivalent to 0.5 percent, reaching USD83.17 per barrel, while US West Texas Intermediate crude saw an increase of 43 cents, equivalent to 0.6 percent, reaching USD79.06 by 0032 GMT.

The United States experienced a lower-than-expected increase in consumer prices in April, reinforcing the financial markets' anticipation of a forthcoming interest rate cut by the Federal Reserve. Such a move could alleviate the strength of the dollar, consequently making oil more affordable for holders of alternative currencies.

Additionally, data from the Energy Information Administration highlighted a decrease in inventories of crude oil, gasoline, and distillates in the United States. This decline was indicative of heightened refining activity and a surge in fuel demand. According to the Energy Information Administration, crude inventories contracted by 2.5 million barrels to 457 million barrels in the week ending May 10, surpassing analysts' average expectations of a 543 thousand barrel reduction in a Reuters poll.

Furthermore, oil prices found support from geopolitical tensions, contributing to the overall bullish sentiment in the market.



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