Oil prices rose in Asian trade on Thursday, extending previous gains, on a bigger-than-expected weekly withdrawal from U.S. crude storage and hopeful demand expectations after the U.S. Federal Reserve sent signals on lower borrowing costs in 2024.
Brent futures rose 23 cents, or 0.31%, settling at $74.49 a barrel by 0345 GMT. U.S. West Texas Intermediate (WTI) crude rose 11 cents, or 0.16%, and settled at $69.58 a barrel.
The market rose in the previous session on worries about the security of Middle East oil supplies after a tanker attack in the Red Sea.
“Crude oil prices rebounded before the Fed meeting, and the event lifted them further,” said CMC Markets’ analyst Tina Teng in a client note.
Lower interest rates reduce consumer borrowing costs, which can boost economic growth and demand for oil. The news also sent the dollar falling for three straight sessions to a four-month low, which makes oil less expensive for foreign purchasers.
Prices were boosted by a larger-than-expected draw from the U.S. crude inventory, Teng added.
The U.S. Energy Information Administration (EIA) said energy firms pulled a bigger than expected 4.3 million barrels of crude from stockpiles during the week ended Dec. 8 as imports fell.
Dissipating concerns about demand growth buoyed the market as well, after the Organization of the Petroleum Exporting Countries (OPEC) blamed the latest crude price slide on “exaggerated concerns” about oil demand growth in its latest monthly report released yesterday evening.
Brent futures have dropped about 10% since OPEC+ announced a new round of production cuts on Nov. 30. OPEC+ includes OPEC and allies like Russia.
Some analysts however cautioned about the rising fuel inventories for the week in the United States, which signal waning winter demand, saying that limited the market’s overall upside.
“It wasn’t all good news, with gasoline and distillate inventories rising,” ANZ analysts Brian Martin and Daniel Hynes said in a client note.
(Reporting by Laura Sanicola and Trixie Yap; Editing by Cynthia Osterman and Gerry Doyle)