Oil prices decreased on Thursday over signs of weakening oil demand in two of the largest oil-consuming countries, the US and China, while the US Fed decision to keep rates unchanged, along with the Middle East conflict, curtailed further price falls.
The international benchmark crude Brent traded at $80.23 per barrel at 11.40 a.m. local time (0840 GMT), a 2.75% decrease from the closing price of $82.50 a barrel in the previous trading session on Wednesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $75.71 per barrel, down 0.18% from Wednesday’s close of $75.85 per barrel.
Prices declined during early Asian trade following the release of data reflecting bearish demand in the US.
Statistics from the Energy Information Administration (EIA) showed a rise in US commercial crude oil inventories of around 2.1 million barrels to 421.9 million barrels, compared to the American Petroleum Institute's expectation of a fall of around 2.5 million barrels.
Gasoline inventories also rose by around 1.2 million barrels to 254.1 million barrels over the same period.
However, price declines were limited by the predicted US Fed decision to keep its federal funds rate unchanged in the 5.25%–5.5% target range—the highest level in 23 years.
US Federal Reserve Chair Jerome Powell said at the latest Federal Open Market Committee (FOMC) meeting that he believes the policy rate is 'likely' at its peak in the monetary tightening cycle.
Powell added that 'if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,' raising hopes of more oil demand.
The better-than-expected macroeconomic data raised the probability of interest rate cuts in June and contributed to oil price upticks.
The decision by China, the second-largest oil consumer in the world, to support the real estate industry financially after the country’s largest real estate company, Evergrande, filed for bankruptcy, also supported expectations that oil demand would rise in support of higher prices.
Meanwhile, ongoing tensions in the Red Sea from the Israel-Palestine conflict continue to put supply chains at risk on one of the world's most frequently used sea routes for oil and fuel shipments, driving oil prices up.
Yemen’s Houthi group said late Wednesday that they targeted an American commercial ship “headed to the ports of occupied Palestine with several naval missiles, resulting in a direct hit.”
A Houthi military spokesman said the assault was in response to US and UK aggression against Yemen and the injustice against the Palestinian people facing continuous Israeli aggression on the Gaza Strip.
By Duygu Alhan and Sibel Morrow
Anadolu Agency
energy@aa.com.tr