By Ken Afor
Oil prices in Asian trade climbed on Thursday, continuing the upward trend from the previous session.
This was driven by a larger-than-anticipated weekly reduction in U.S. crude storage and a more positive outlook for demand following the U.S. Fed’s indication of lower borrowing costs until 2024.
At 06:58 GMT, Brent futures experienced a 0.55% increase, equivalent to a rise of 41 cents, reaching $74.67 per barrel.
Simultaneously, U.S. West Texas Intermediate (WTI) crude saw a climb of 0.46%, or 32 cents, reaching $69.79 per barrel.
The market experienced an increase during the previous session due to concerns regarding the safety of oil supplies in the Middle East following an attack on a tanker 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.
Lowering interest rates can have a positive impact on the economy by reducing consumer borrowing costs. This, in turn, can stimulate economic growth and increase the demand for oil.
Additionally, the recent announcement has caused the value of the dollar to decline over three consecutive sessions, reaching a four-month low. As a result, this depreciation makes oil more affordable for foreign buyers.
The U.S. Energy Information Administration (EIA) reported that energy companies extracted a higher-than-anticipated 4.3 million barrels of crude oil from inventories in the week ending on December 8, due to a decline in imports.
The market was further uplifted as concerns regarding demand growth were alleviated. This positive sentiment was reinforced by the Organization of the Petroleum Exporting Countries (OPEC), which attributed the recent decline in crude prices to “exaggerated concerns” about oil demand growth in its monthly report released on Wednesday.
Since the announcement of a new round of production cuts by OPEC+ on November 30, Brent futures have witnessed a decline of approximately 10%. OPEC+ comprises OPEC and its allied nations, including Russia.
Some experts, though, raised concerns regarding the increasing fuel stockpiles in the United States for the week, indicating a decline in winter demand.
“It wasn’t all good news, with gasoline and distillate inventories rising,” ANZ analysts Brian Martin and Daniel Hynes said in a client note.
