Brent crude oil futures for delivery in October rose 0.5 percent to $81.09 per barrel
Oil prices rose on Wednesday, supported by industry data pointing to a larger-than-expected drawdown in U.S. inventories. In addition, weaker-than-expected inflation data fueled hopes for more aggressive interest rate cuts.
Sentiment in the oil market remained tense as traders expected increasing geopolitical tensions in the Middle East.
Brent crude futures for October delivery rose 0.5 percent to $81.09 a barrel, while West Texas Intermediate (WTI) crude futures rose 0.5 percent to $77.21 a barrel by 8:58 p.m. ET (00:58 GMT).
Robust demand despite summer travel slump
Data from the American Petroleum Institute showed that U.S. oil inventories fell by 5.2 million barrels in the week ended August 10, well above the expected decline of 2 million barrels.
Gasoline stocks declined, while distillate stocks rose slightly.
The reading, which typically precedes a similar result from official inventory data, suggests that demand in the world’s largest fuel consumer remained robust even as the peak summer travel season came to an end.
The data helped oil bulls overlook a recent reduction in the Organization of the Petroleum Exporting Countries’ (OPEC) forecast for demand growth in 2024 and also eased concerns that a slowdown in U.S. economic growth would dampen demand.
In addition, the International Energy Agency (IEA) also lowered its forecast for oil demand in 2024 earlier this week.
Read more: Oil prices fall as OPEC cuts 2024 demand forecast amid China slowdown
Expectations for stronger interest rate cuts by the Fed
On the US economic front, weaker-than-expected producer price index data on Tuesday boosted hopes of a cooling of inflation and gave the US Federal Reserve further impetus for deeper interest rate cuts.
This figure was announced just ahead of the release of consumer price index (CPI) inflation data, which will be released later on Wednesday and are also expected to show a slight decline in inflation in July.
The prospect of interest rate cuts represents a more positive development for the U.S. economy, particularly amid recent concerns that slowing growth may require further rate cuts by the Fed.
According to CME Fedwatch, traders were leaning toward a 50 basis point cut in September rather than a 25 basis point cut after Tuesday’s data.
In addition to inflation data, industrial production and retail sales figures from the US and China will also be released this week.
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