Oil prices edged upwards on Thursday, bolstered by a substantial weekly decline in U.S. crude inventories that surpassed analysts’ expectations.
Brent futures gained 13 cents, or 0.2%, reaching $85.21 per barrel as of 0023 GMT, while U.S. West Texas Intermediate (WTI) crude increased by 31 cents, or 0.4%, to $83.16.
The rise in Brent marked a 1.6% increase on Wednesday, while WTI saw a 2.6% uptick.
According to data released by the U.S. Energy Information Administration, U.S. crude stocks fell by 4.9 million barrels last week. This figure starkly contrasted with the anticipated 30,000-barrel decline forecast by analysts in a Reuters poll and the 4.4 million-barrel drop reported by the American Petroleum Institute.
Supporting the market further, speculation of impending interest rate cuts in the United States and Europe contributed to market optimism. Lower interest rates typically stimulate economic activity, potentially boosting oil demand.
Federal Reserve officials indicated on Wednesday that the U.S. central bank is leaning towards cutting interest rates, citing an improved inflation trajectory and a stable labor market. This stance sets the stage for a possible reduction in borrowing costs as early as September.
Meanwhile, U.S. economic activity showed modest expansion from late May through early July, with firms anticipating slower growth in the near future.
In Europe, the European Central Bank is expected to maintain its current interest rates unchanged on Thursday but hinted at potential future cuts.
Investor attention also focused on policy updates from a pivotal leadership conference in China scheduled to conclude on Thursday.
The dollar weakened for the third consecutive session on Thursday. A softer dollar typically enhances demand for oil by reducing the cost of dollar-denominated commodities such as oil for holders of other currencies.
