Oil Prices Find a Fresh Groove: Oil prices danced into the Asian market spotlight on Thursday, riding the wave of previous gains, propelled by a significant weekly withdrawal from U.S. crude storage and the optimistic outlook fueled by the U.S. Federal Reserve’s signals of lower borrowing costs in 2024.
Brent futures rose 23 cents to $74.49 a barrel, 0.31% higher. U.S. West Texas Intermediate (WTI) crude rose 11 cents to $69.58 a barrel, up 0.16%. A Red Sea tanker raid raised concerns about Middle East oil security, causing a rise the previous session. CMC Markets’ analyst Tina Teng weighed in, noting, “Crude oil prices rebounded before the Fed meeting, and the event lifted them further.”
Lower interest rates, a result of the Fed’s stance, not only cut consumer borrowing costs, potentially boosting economic growth and oil demand, but also sent the U.S. dollar on a three-session downward spiral to a four-month low. This, in turn, made oil more appealing to foreign buyers. Teng highlighted that the news of a moEnergy Information Administrationre substantial-than-expected draw from U.S. crude inventories also provided a lift.
Also Read: Oil Prices Take a Tumble: Oversupply and Demand Woes Deepen Losses
According to the U.S. Energy Information Administration (EIA), energy firms made a hefty withdrawal of 4.3 million barrels from stockpiles in the week ending Dec. 8, further underscoring the positive momentum.
Despite the headwinds of concerns around waning winter demand signaled by rising fuel inventories in the U.S., OPEC took a bullish stance. The organization, along with its allies, attributed the recent crude price slide to “exaggerated concerns” about oil demand growth in its latest monthly report. Yet, as ANZ analysts Brian Martin and Daniel Hynes wisely cautioned, “It wasn’t all good news, with gasoline and distillate inventories rising.”