Oil prices rise on falling US inventories, economic optimism
Date
7/18/2024 3:43:26 AM
(MENAFN) On Thursday, oil prices continued their upward trajectory from the previous session, driven by a larger-than-expected drop in U.S. crude inventories, highlighting robust demand from the world's largest oil consumer. By 0340 GMT, brent crude futures had risen by 32 cents, or 0.4 percent, reaching USD85.40 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude saw a 48-cent increase, or 0.6 percent, bringing its price to USD83.33 per barrel. Both benchmarks had closed higher on Wednesday, buoyed by the latest data from the U.S. energy Information Administration, which reported a substantial 4.9 million barrel decline in crude inventories last week. This figure surpassed the 4.4 million barrel reduction reported by the American Petroleum Institute trade group.
Priyanka Sachdeva, a senior market analyst at Philip Nova, remarked that strong demand signals from the U.S. have mitigated concerns about slowing economic growth in China. She added that expectations of monetary easing, which could stimulate economic growth, alongside the current summer travel season in the U.S., are providing significant impetus for oil demand from the world's largest economy. The market was further supported by the prospect of interest rate cuts in the coming months in both the United States and Europe. Two Federal Reserve officials indicated on Wednesday that the U.S. central bank is nearing the point of cutting interest rates as inflation shows signs of improvement and the labor market stabilizes, potentially setting the stage for a reduction in borrowing costs by September.
Moreover, U.S. economic activity expanded at a slight to modest pace from late May through early July, although businesses are bracing for slower growth ahead. This balanced outlook reflects the complex interplay of factors influencing the oil market, where strong domestic demand in the U.S. contrasts with global economic uncertainties, particularly in China. Despite these challenges, the hope for supportive monetary policies continues to bolster market confidence, driving oil prices higher.
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