Oil Prices Rise After U.S. Inventory Data

By Nicole Jao

NEW YORK (Reuters) – Oil prices inched up on Thursday, recovering from two-week lows, after data showed falling crude and fuel inventories in the United States.

Brent crude futures settled at $74.45 a barrel, up 23 cents, or 0.31%. U.S. West Texas Intermediate crude futures settled down 28 cents, or 0.4%, at $70.67 a barrel.

Both benchmarks had settled down on Wednesday, closing at their lowest levels since October 2 for a second consecutive day, following OPEC and the International Energy Agency's cut in demand forecasts for 2024 and 2025.

U.S. crude inventories fell by 2.2 million barrels to 420.6 million barrels in the week ending October 11, according to the Energy Information Administration, contrasting with analysts' expectations for a 1.8 million-barrel increase shown in a Reuters poll. Gasoline and distillate inventories also declined last week.

Tim Snyder, chief economist at Matador Economics, commented, "This tells me operational efficiencies are still improving. Markets are normalizing."

Oil output in North Dakota, the third-largest producing state in the U.S., decreased by about 500,000 barrels due to wildfires in key producing counties earlier this month, according to a state regulator.

The European Central Bank (ECB) cut interest rates for the third time in 2023 on Thursday, suggesting inflation in the eurozone is becoming more controlled and that the economic outlook is deteriorating.

This decision is anticipated to increase oil prices as it lowers borrowing costs, potentially raising demand.

However, concerns regarding a retaliatory attack by Israel on Iran following a missile strike on October 1 kept prices steady, despite uncertainty about the future of the Middle Eastern conflict. John Evans from oil broker PVM noted, "The country's forthcoming retaliatory measures against Iran are still not clear," adding that the situation in the Middle East will likely influence oil prices soon, while investors focus on an abundance of financial data.

Additionally, the dollar rose to an 11-week high on Thursday, offsetting some gains in oil prices, as a stronger U.S. currency can affect demand for U.S.-priced oil among foreign buyers.

Investors are also awaiting more details from China regarding plans announced on October 12 aimed at revitalizing its struggling economy, including measures to support the faltering property market.