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Oil prices inch upward amid decline in U.S. crude stocks and steady demand

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Oil prices saw a modest increase on Thursday as U.S. crude inventories dropped significantly and gasoline stocks decreased, suggesting stronger demand. Brent futures rose by 35 cents, or 0.4%, reaching $85.43 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed 36 cents, or 0.5%, to $82.47 a barrel.

U.S. crude inventories fell by 3.4 million barrels to 445.1 million barrels in the week ending July 5, surpassing analysts’ expectations of a 1.3 million-barrel draw, according to a Reuters poll.

Additionally, gasoline stocks fell by 2 million barrels to 229.7 million barrels, a much larger decline than the anticipated 600,000-barrel drop during the U.S. Fourth of July holiday week.

The Organisation of the Petroleum Exporting Countries (OPEC) maintained its forecast for robust global oil demand growth in 2024 and the following year. OPEC cited resilient economic growth and increased air travel as key factors supporting fuel consumption during the summer months.

Despite these gains, the rise in oil prices was tempered by minimal supply disruptions at refineries and offshore production facilities caused by Hurricane Beryl.

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Market participants are also keeping an eye on upcoming U.S. inflation data, including the Consumer Price Index report on Thursday and the Producer Price Index report on Friday, which could influence market dynamics.

Expectations for a 25-basis-point rate cut by September increased to 74%, up from around 70% on Tuesday and 45% a month ago, according to CME’s FedWatch.

Lower interest rates typically reduce borrowing costs, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell reiterated on Wednesday that the U.S. central bank will make interest rate decisions “when and as” needed, addressing concerns that a September rate cut might be seen as politically motivated ahead of the presidential election.

However, by midday Monday, both Brent crude and U.S. West Texas Intermediate crude were down roughly a percent each, reflecting the market’s ongoing volatility.

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