Oil prices rise as crude and gasoline inventories decline

By Arathy Somasekhar

(Reuters) – Oil prices edged higher on Thursday as crude inventories fell after U.S. refineries ramped up processing and gasoline stockpiles fell, signaling stronger demand.

Brent crude futures rose 35 cents, or 0.4%, to $85.43 a barrel. U.S. West Texas Intermediate (WTI) crude rose 36 cents, or 0.5%, to $82.47 a barrel.

U.S. crude inventories fell 3.4 million barrels to 445.1 million barrels in the week ended July 5, far beating analysts’ expectations for a 1.3 million barrel drop in a Reuters poll.

Gasoline inventories fell 2 million barrels to 229.7 million barrels, well above the 600,000-barrel drop analysts had expected during the July 4 holiday week in the United States.

The Organization of the Petroleum Exporting Countries (OPEC) also maintained its forecast for relatively strong growth in global oil demand in 2024 and next year, saying on Wednesday that resilient economic growth and air travel would support fuel consumption during the summer months.

Gains were limited, however, due to supply disruptions at refineries and offshore production facilities caused by Hurricane Beryl, which were minimal.

Meanwhile, U.S. inflation data due this week include the Consumer Price Index on Thursday and the Producer Price Index report on Friday, both of which could set the tone for the market.

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

Lower interest rates lower the cost of borrowing, which can boost economic activity and demand for oil.

Federal Reserve Chairman Jerome Powell said Wednesday that the U.S. central bank would make interest rate decisions “when and as” they are needed, pushing back against the idea that a September rate cut could be seen as a political act ahead of the fall presidential election.

(Reporting by Arathy Somasekhar in Houston; Editing by Muralikumar Anantharaman)

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