Oil prices extended their gains on Thursday, boosted by signs of strengthening demand in the United States that showed inflation was slower than markets expected, boosting expectations for an interest rate cut that could further boost consumption.
Brent futures were up 35 cents, or 0.4%, at $83.10 a barrel at 0310 GMT, while WTI crude was up 40 cents, or 0.5%, at $79.03.
Moderate data on US April inflation and much weaker-than-expected data on US retail sales appear to offer room for the Fed to consider earlier rate cuts. Market expectations are showing a stronger trend that policy easing will begin in September this year.
While the larger-than-expected decrease in US crude oil stocks last week provided some calm, geopolitical tensions continue to increase in the Middle East.
U.S. consumer prices rose less than expected in April as financial markets raised expectations for a Fed interest rate cut in September; This could reduce the dollar’s strength and make oil more affordable for holders of other currencies.
Stockpiles of WTI crude oil, gasoline, and distillates fell, reflecting an increase in both refining activity and fuel demand, according to data from the Energy Information Administration (EIA).
Crude inventories fell 2.5 million barrels to 457 million barrels in the week ended May 10, compared to the consensus forecast of 543,000 barrels in a survey of analysts, the EIA said.
Signs of slowing inflation and strengthening demand are supporting prices, and geopolitical risk remains high. Ceasefire talks mediated by Qatar and Egypt have reached an impasse. While Hamas demands that the attacks be stopped, Israel rejects this demand until Hamas is destroyed.
Gains were limited after the IEA cut its forecast for 2024 oil demand growth and the gap between the views of members of the producer group OPEC widened.
The IEA said global oil demand will rise by 1.1 million barrels per day (bpd) this year, down 140,000 bpd from its previous forecast, largely due to weak demand in developed countries in the Organization for Economic Co-operation and Development.
