Oil Prices Rise Amid Shrinking US Oil Inventories

Oil prices surged on Thursday, propelled by an unexpected drop in US crude oil inventories that points to a strengthening demand landscape.

Brent crude climbed roughly 0.4% to $64.96 per barrel, while West Texas Intermediate (WTI), the US benchmark, gained about 0.4%, hitting $62.45 per barrel after closing at $62.18 in the prior session.

The rally was triggered by a steep 4.3 million-barrel decline in US commercial crude inventories, bringing the total to 436.1 million barrels last week, as reported by the US Energy Information Administration (EIA).

This plunge outpaced analyst predictions of a 2.9 million-barrel drawdown, underscoring robust demand and sparking optimism across energy markets.

Meanwhile, strategic petroleum reserves, separate from commercial stocks, ticked up by 500,000 barrels to 401.8 million barrels.

Gasoline inventories also swelled, rising by approximately 5.2 million barrels to 228.3 million barrels over the same timeframe.

Adding to the bullish mood, speculation is mounting that the Federal Reserve may slash interest rates as soon as July, earlier than the anticipated September timeline.

Such a move, paired with a softer dollar and brighter economic conditions, is widely seen as a tailwind for oil prices in the near term.

On the global stage, promising strides in trade discussions, especially the prospect of a deal with the European Union, have calmed fears of a trade war, lifting expectations for sustained oil demand worldwide.

Looking ahead, the EIA’s Short-Term Energy Outlook (STEO) from May 7 projects US crude oil production to average 13.4 million barrels per day (bpd) in 2025, signaling a steady supply trajectory.