Oil Prices Rise as U.S Inventories Ease, Raising Demand Outlook

Oil Prices Rise as U.S Inventories Ease, Raising Demand Outlook

Oil prices climbed on Thursday as data showed a decrease in US crude oil inventories, suggesting a positive import demand outlook amidst the Federal Reserve’s uncertain interest rate outlook.

Brent crude increased by around 0.4%, trading at $64.96 per barrel, while US benchmark West Texas Intermediate (WTI) rose by about 0.4%, reaching $62.45 per barrel, compared to $62.18 in the prior session

The modest gains follow a larger-than-expected draw in US commercial crude inventories, which declined by 4.3 million barrels to 436.1 million barrels last week, according to data from the US Energy Information Administration (EIA).

The drop exceeded analyst forecasts of a 2.9 million-barrel decrease, reinforcing expectations of stronger demand.  Strategic petroleum reserves, which are excluded from commercial crude stocks, increased by 500,000 barrels, reaching 401.8 million barrels, the data revealed.

Over the same period, gasoline inventories rose by around 5.2 million barrels to 228.3 million barrels. Market sentiment was also buoyed by rising expectations that the Fed could deliver its first rate cut as early as July, ahead of previous forecasts for a move in September.

The yield on the US 10-year Treasury fell about 11 basis points on Wednesday to 4.35%, before closing at 4.36%. It hovered around 4.37% in early Thursday trading.

Analysts say recent data signal mounting risks to US economic growth, prompting investors to recalibrate rate expectations. Lower interest rates, coupled with a weaker dollar and improved macroeconomic conditions, are seen as supportive for oil prices going forward.

Trade policy developments also remain a key market driver. US President Donald Trump is expected to meet with Chinese President Xi Jinping later this week as part of ongoing tariff negotiations. Parallel discussions between the US and EU continue, with officials from both sides meeting recently.

Analysts note that progress in trade talks—particularly a potential agreement with the EU—has helped ease fears of a deepening global trade war, contributing to a more optimistic outlook for global oil demand.

In the Short-Term Energy Outlook (STEO) released on May 7, the EIA projected that crude oil output in the country would average 13.4 million bpd in 2025. #Oil Prices Rise as U.S Inventories Ease, Raising Demand Outlook Diri Signs 2025 Budget Into Law