Oil rises supported by a decline in US crude inventories

Oil prices rose during trading, Thursday, supported by a decline in US crude oil inventories, but gains were limited after the US Federal Reserve indicated that it would slow the pace of reducing interest rates next year, which could affect economic growth, reduce demand for fuel and support the dollar.

Price movements

Brent crude futures rose 44 cents, or 0.60 percent, to $73.83 a barrel by 14:14 GMT.

US West Texas Intermediate crude for January delivery gained a cent, or 0.96 percent, to $71.26 a barrel, while US West Texas Intermediate crude contracts for February delivery rose 52 cents to $70.54 a barrel.

The Federal Reserve lowered interest rates yesterday, Wednesday, and indicated that it would slow the pace of reducing interest rates next year if the unemployment rate stabilizes and the inflation rate improves.

A rise in the dollar would raise the cost of goods priced in it, and high interest rates would put pressure on economic growth and possibly reduce demand for oil.

Meanwhile, China Petroleum and Chemical Corporation (Sinopec) said Thursday that it expects China’s oil consumption to peak by 2027.

Suvro Sarkar, head of the energy sector at DBS Bank, said: “The balance of supply and demand until 2025 still appears unfavorable, and expectations of demand growth of more than one million barrels per day in 2025 appear exaggerated in our opinion. And even if the coalition continues… “With OPEC+ production cuts, the market will still see a surplus.”

Although demand rose year-on-year in the first half of December, order volumes remained below some analysts’ expectations.

Analysts at JP Morgan said that the growth in global oil demand in December so far was about 700,000 barrels per day less than expected, and they added that global demand this year rose by about 200,000 barrels per day less than expected in November 2023.

Official data from the US Energy Information Administration showed yesterday, Wednesday, that crude stocks in America decreased by about 934 thousand barrels in the week ending December 13.

Analysts polled by Reuters had expected a decline of about 1.6 million barrels.

While the decline was less than expected, the market found support from the rise in US crude exports last week by about 1.8 million barrels per day to 4.89 million barrels per day.