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16/05/24
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Crude Prices Higher; Declining US Inventories, Mild CPI Indicate Rising US Demand
On Thursday, crude prices were higher and extended the prior session’s gains on indications of stronger demand in the U.S., the biggest oil consumer in the world.
Brent oil futures were 0.3% higher at $83.03 per barrel, while West Texas Intermediate crude futures were 0.6% higher at $79.06 per barrel.
A larger-than-expected draw in U.S. inventories fueled hopes of tighter supplies globally in the next few months, the summer driving season. Declining inventories may also indicate tighter U.S. markets, though this was offset by production staying close to record highs.
The focus was also on an accident in Galveston, Texas, which led to an oil spill, for any potential disruptions to supply.
The crude market has been influenced by the wider cheer over lower readings of U.S. consumer price index inflation, which pushed the dollar lower and resulted in traders increasing bets on an interest rate cut in September.
The possibility of lower rates is tied to hopes that economic activity globally will not ease as fast as expected in 2024, which is in turn good for oil demand.
Stronger oil prices were also affected by a softer dollar as the commodity is priced in the currency. A lower dollar also stimulates international demand by making oil cheaper to purchase.
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