Oil Prices Surge on U.S. Crude Storage Decline, Fed Rate Cut Speculation

Oil Prices Surge on U.S. Crude Storage Decline, Fed Rate

Oil Prices Surge on U.S. Crude Storage Decline, Fed Rate Cut Speculation

In the early hours of Thursday, oil prices saw an uptick, buoyed by the shrinking U.S. crude inventories, indicating tighter supply conditions. Additionally, market sentiment was bolstered by growing optimism surrounding potential interest rate cuts by the Federal Reserve later in the year.

Brent crude futures for July rose 23 cents to $83.81 per barrel by 0033 GMT. Similarly, June U.S. West Texas Intermediate crude climbed 29 cents to $79.28 per barrel.

The Energy Information Administration reported a notable decrease in crude inventories last week, dropping 1.4 million barrels to 459.5 million barrels. This reduction surpassed analysts’ expectations, as a Reuters poll had projected a 1.1 million-barrel draw, attributed to increased refinery activity.

However, the surge in gasoline stocks, which unexpectedly expanded by over 900,000 barrels to reach 228 million barrels, as stated by the EIA, exerted downward pressure on prices, preventing them from rising further.

Moreover, anticipation mounted regarding the possibility of the U.S. central bank implementing interest rate cuts by the year’s end, particularly following weaker-than-anticipated U.S. jobs data. Lower interest rates tend to stimulate spending on crude oil, thus contributing to the positive trajectory of oil prices.

Despite these factors, hopes for a ceasefire in the Middle East emerged. The U.S. expressed optimism earlier in the week regarding negotiations for a Gaza ceasefire, aiming to bridge the divide between Israel and Hamas. This geopolitical development tempered the upward momentum of oil prices.

In summary, the combination of shrinking U.S. crude inventories, prospects of the Federal Reserve’s interest rate cuts, and geopolitical dynamics in the Middle East influenced oil prices’ fluctuation in early trading on Thursday.

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