Crude, Petrol US Inventory Drop Fuels Oil Price Hike

11 Jul 2024 , 09:43 AM

Oil prices rose on Thursday as crude supplies decreased after U.S. refineries increased processing and petrol inventories declined, indicating rising demand.

Brent futures increased 35 cents (0.4%) to $85.43 per barrel. US West Texas Intermediate (WTI) crude increased 36 cents, or 0.5%, to $82.47 per barrel.

In the week ending July 5, U.S. oil stocks fell by 3.4 million barrels to 445.1 million barrels, significantly above analysts’ estimates in a Reuters poll for a 1.3 million-barrel draw.

Gasoline stocks fell by 2 million barrels to 229.7 million barrels, much bigger than the 600,000-barrel draw analysts expected during the U.S. Fourth of July holiday week.

The Organisation of Petroleum Exporting Countries also maintained its projection for reasonably high rise in global oil demand in 2024 and next year, stating on Wednesday that robust economic development and air travel would underpin gasoline consumption throughout the summer months.

Gains were limited, however, because storm Beryl caused only minor supply interruptions at refineries and offshore production sites.

Meanwhile, U.S. inflation statistics due this week include the Consumer Price Index on Thursday and the Producer Price Index on Friday, both of which might set the market’s tone.

Expectations for a 25-basis-point rate cut by September rose to 74% from roughly 70% on Tuesday and 45% a month ago, according to CME’s FedWatch.

Lower interest rates reduce the cost of borrowing, thereby boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell said on Wednesday that the US central bank will make interest rate decisions “when and as” they are appropriate, rejecting the notion that a September rate decrease could be interpreted as a political gesture ahead of the fall presidential election.

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