Oil prices continued to climb on Thursday, buoyed by signs of stronger demand in the U.S. and lower-than-expected inflation data. Brent futures rose 0.5% to $83.17 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 0.6% to $79.06.
The U.S. saw slower inflation in April, leading to speculation of a potential interest rate cut by the Federal Reserve in September. This could further boost demand for oil as it becomes more affordable for holders of other currencies.
Data from the Energy Information Administration (EIA) showed a decrease in U.S. crude oil, gasoline, and distillate inventories, indicating a rise in refining activity and fuel demand. Crude inventories fell by 2.5 million barrels to 457 million barrels, surpassing analyst forecasts.
Geopolitical tensions in the Middle East also contributed to the rise in oil prices, with Israeli troops engaging Hamas militants in Gaza. Ceasefire talks mediated by Qatar and Egypt have hit a stalemate, with Hamas demanding an end to attacks and Israel refusing until the group is eliminated.
However, gains in oil prices were tempered by the International Energy Agency (IEA) revising down its forecast for 2024 oil demand growth. The IEA now predicts global oil demand to grow by 1.1 million barrels per day, down 140,000 bpd from its previous estimate, mainly due to weak demand in developed nations.
Overall, the combination of stronger demand, lower inflation, and geopolitical tensions are driving oil prices higher, with market watchers closely monitoring the evolving situation.