Oil rises on US inventory draw, upbeat demand expectations. The price of oil increased in Asian trading on Thursday, extending the gains made in the previous session. This was due to a larger-than-expected weekly withdrawal from crude storage in the United States and a better prognosis for demand following the announcement by the Federal Reserve that it would reduce the cost of borrowing.
As of 06:58 GMT, a barrel of Brent futures has increased by 41 cents, or 0.55%, to $74.67. The price of a barrel of West Texas Intermediate (WTI) oil in the United States increased by 32 cents, or 0.46%, to $69.79.
Following an attack on a tanker in the Red Sea, the market experienced a rise in the previous session due to concerns over the safety of oil supplies from the Middle East.
“Crude oil prices rebounded before the Fed meeting, and the event lifted them further,” said Tina Teng, an analyst at CMC Markets, in a client note.
Low interest rates bring down the cost of consumers borrowing money, stimulating economic expansion and increasing oil demand. The news also caused the dollar to decline for three consecutive sessions, reaching a four-month low. This results in a decrease in the price of oil for companies that are purchasing it from outside.
According to Teng, prices were lifted due to a larger-than-expected pull from the oil inventories in the United States.
According to the Energy Information Administration (EIA) of the United States, energy companies removed 4.3 million barrels of crude from their stocks during the week that concluded on December 8th, which was significantly more than what was anticipated.
After the Organization of the Petroleum Exporting Countries (OPEC) blamed the most recent drop in crude prices on “exaggerated concerns” about oil demand growth in its most recent monthly report, issued on Wednesday, the market was also boosted by the dissipating concerns about demand growth.
Since the announcement of a new round of production cutbacks by OPEC+ on November 30th, Brent futures have experienced a decline of almost 10%. Both OPEC and its allies, including Russia, are members of OPEC+.
On the other hand, some analysts expressed concern about the growing fuel stocks for the week in the United States, which indicates a decrease in demand during the winter season.
According to a client note from ANZ analysts Brian Martin and Daniel Hynes, it wasn’t all good news, significantly because gasoline and distillate stockpiles were increasing.
