Oil Prices Lifted by US Stockpile Drop and Interest Rate Cut Expectations
Oil prices have remained stable despite signals of a drawdown in U.S. crude inventories and concerns over Chinese demand. The American Petroleum Institute reported a reduction of 1.92 million barrels in crude stockpiles last week, with a notable drawdown at the Cushing, Oklahoma hub. Although there are concerns regarding potential Federal Reserve interest-rate cuts and deflationary pressures in China, oil prices have remained higher this year, largely due to OPEC+ supply cuts and expectations of looser U.S. monetary policy.
In Asian trade, oil prices saw a rise due to a larger-than-expected draw in U.S. inventories, despite an increase in distillate stockpiles. The rise follows recent declines influenced by less severe impacts from Tropical Storm Beryl and ongoing speculation about a ceasefire between Israel and Hamas. Brent futures increased by 21 cents to $84.87 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 26 cents to $81.67 a barrel. The American Petroleum Institute's figures indicated a draw of 1.923 million barrels in crude stocks and a reduction of 2.954 million barrels in gasoline inventories, though distillate supplies rose by 2.342 million barrels.
The rebound in oil prices also reflects steady demand and optimism about potential interest rate cuts, as suggested by Federal Reserve Chair Jerome Powell. Powell's comments have led to a nearly 70% probability of a Fed rate cut in September, which could stimulate economic growth and increase oil consumption. Additionally, the U.S. Energy Information Administration (EIA) report forecasts that global oil consumption will exceed supply next year, supporting the outlook for higher oil prices.
