Oil rises with shrinkage in stocks
Oil rose for a second day, supported by broader risk appetite triggered by the shrinkage in US inventories and signs of a decline in US inflation.
Global benchmark Brent rose above $83 per barrel after rising 0.5 percent on Wednesday, while US crude oil was above $79. U.S. oil inventories fell by 2.5 million barrels last week, the first back-to-back decline since March, and nationwide stockpiles fell to their lowest level in almost a month.
Risk assets in broader markets rose after U.S. inflation cooled for the first time in six months, providing room for looser monetary policy from the Fed. That sent the U.S. dollar lower and made commodities more attractive to overseas buyers, with the Bloomberg gauge showing a third day of losses.
Crude oil has been trending higher since the start of the year as OPEC+ countries cut supply, but prices have pared gains since the beginning of April as tensions in the Middle East eased and some signs of product weakness emerged. The International Energy Agency cut its annual demand growth forecast by 140,000 barrels per day in its midweek report, but sees global demand still at an annual record level of 103.2 million barrels per day after revising last year’s consumption forecasts.
“The latest macro data from the US has increased expectations that the Fed may start cutting interest rates soon, which will provide some support for oil,” said Warren Patterson, head of commodity strategy at ING Groep NV.
With Russian President Vladimir Putin coming to Beijing for his first visit to China in his new term, geopolitics also became the center of attention and emphasized the importance of the relationship with Moscow, which continues its war in Ukraine. Asia’s largest economy began flowing more Russian crude oil as buyers in Europe and the United States returned after the invasion.