Oil prices recover after a shaft decline earlier this week
Oil prices rose in Asian trading on Thursday, June 6th, as expectations grew that the Federal Reserve will cut interest rates in September and when the market recovers from a selloff related to growing U.S. inventories and an OPEC+ plan to increase supply.
Brent crude futures rose 27 cents, or 0.34%, to $78.68 a barrel at 01:03 GMT, while U.S. WTI crude futures rose 36 cents, or 0.49%, to $74.43.
From a Reuters poll conducted from May 31 st to June 5th, nearly 2/3 of economists are now predicting an interest rate cut in September. Lower interest rates decrease the cost of borrowing, which can incentivise economic activity and boost oil demand.
The Bank of Canada’s interest rate cut on Wednesday and the upcoming interest rate cut by the European Central Bank on Thursday also raise hopes of looser monetary policy, which traders hope will boost oil demand later this year.
But rate cuts come amid bleak global economic conditions, which could still dampen oil demand.
The US inventory is starting to rise
Government inventory data on Wednesday showed U.S crude inventories rose by 1,2 million barrels in the week ended May 31st, compared with expectations of a 2,1 million barrel decline.
Distillate products rose more than expected by 3,2 millions barrels, while gasoline inventories increased slightly less than expected at 2,1 million barrels.
The overall inventory rise has raised some concerns about cooling demand in the world’s largest fuel consumer, even as the summer, the season of tourism begins.
