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Oil Prices Rise on Larger-than-Expected U.S. Crude Stock Decline

Banking and Insurance

Business Honor
18 July, 2024

The dollar’s decline in three recent sessions also supported oil prices, making oil and other dollar-dominated commodities more affordable for other currencies

Oil prices continued to rise on Wednesday, beating analyst expectations. The surge was driven by a major drop in U.S. crude inventories. Brent crude futures reached 58 cents at $85.66 a barrel, while U.S. West Texas Intermediate (WTI) crude surged by 75 cents to $83.60 per barrel.

According to the latest data from the U.S. Energy Information Administration, there was a substantial decline of 4.9 million barrels in crude stocks previous week. This unexpected drop is followed by a previous report from the American Petroleum Institute revealing a 4.4 million barrel decrease. Priyanka Sachdeva, senior market analyst at Philip Nova, highlighted strong demand signals from the United States, the world’s biggest oil consumer, raising concerns about the slowing growth rate in China. She attributed market strength to expectations that the Federal Reserve might cut interest rates aimed at strengthening economic growth. The dollar’s decline in three recent sessions also supported oil prices, making oil and other dollar-dominated commodities more affordable for other currencies. Investors are keenly awaiting policy updates from the leadership meeting in China and the European Central Bank's impending decision on interest rates.

Amidst these changes, market sentiment remains optimistic, with a focus on future economic indicators and geopolitical developments that will affect the global oil market.