Oil rates see uptick due to positive demand outlook in US
Date
7/18/2024 9:53:51 AM
(MENAFN) On Thursday, oil prices experienced an uptick due to a positive demand outlook in the US, bolstered by inventory data from the energy Information Administration (EIA) and signals of a potential interest rate cut from the US Federal Reserve (Fed).
As of 11:20 a.m. local time (08:20 GMT), international benchmark brent crude was trading at USD85.48 per barrel, reflecting a 0.47 percent increase from the previous session’s closing price of USD85.08 per barrel. Meanwhile, the American benchmark West Texas Intermediate (WTI) rose to USD81.91 per barrel, marking a 0.58 percent gain from the previous session's close of USD81.44 per barrel.
According to the EIA's data released late Wednesday, US commercial crude oil inventories fell by 4.9 million barrels, bringing the total down to 440.2 million barrels for the week ending July 12. This decrease significantly exceeded market expectations, which had predicted a drop of around 900,000 barrels. The reduction in crude stockpiles in the US, the world's largest oil consumer, indicates an uptick in demand, further contributing to the rise in oil prices.
Additionally, Fed Governor Christopher Waller mentioned on Wednesday that the central bank is nearing a decision on interest rate cuts, as inflation appears to be slowing down. The anticipation of a rate reduction by the Fed is expected to enhance economic activity in the country.
The US Federal Reserve is projected to initiate interest rate cuts in December, following an anticipated reduction in September. The European Central Bank is also expected to follow a similar trajectory around the same time.
Moreover, ongoing conflicts in the Middle East, home to a significant portion of the world's oil reserves, are raising concerns about potential disruptions to global oil supply. Escalating tensions, including Israel's military actions in the Gaza Strip and conflicts in the Red Sea—crucial for global maritime trade—are contributing to upward pressure on oil prices.
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