Oil prices rose on Thursday following a larger-than-expected decline in U.S. crude inventories, signaling a potential rebound in demand amid growing expectations of interest rate cuts by the Federal Reserve.
Brent crude gained 0.4% to trade at $64.96 per barrel, while West Texas Intermediate (WTI) rose to $62.45 per barrel, up from $62.18 in the previous session.
According to the U.S. Energy Information Administration (EIA), commercial crude oil inventories fell by 4.3 million barrels last week to 436.1 million barrels—significantly more than analysts’ expectations of a 2.9 million-barrel drawdown. The sharper-than-forecast decline strengthened market sentiment around rising fuel demand heading into the summer months.
While commercial stocks dropped, the U.S. Strategic Petroleum Reserve (SPR) saw a modest increase of 500,000 barrels, bringing total reserves to 401.8 million barrels. However, gasoline inventories jumped by 5.2 million barrels, reaching 228.3 million barrels.
Investor sentiment was further lifted by renewed speculation that the U.S. Federal Reserve may implement its first interest rate cut as early as July—sooner than previously projected for September. This outlook was supported by declining bond yields, with the U.S. 10-year Treasury yield falling 11 basis points to close at 4.36% on Wednesday, before hovering near 4.37% in early Thursday trading.
Analysts say recent economic data points to softening growth, prompting the market to revise expectations for monetary easing. Lower interest rates typically weaken the U.S. dollar and stimulate economic activity—both factors that support higher oil prices.
Meanwhile, geopolitical and trade developments remain key to market dynamics. Anticipation is building around a potential meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this week, amid ongoing negotiations to resolve long-standing trade tensions. Parallel discussions with the European Union are also underway.
Progress in global trade talks, particularly any breakthrough with the EU, could reduce uncertainty and improve the global demand outlook for oil, analysts said.
In its latest Short-Term Energy Outlook (STEO) released on May 7, the EIA projected that U.S. crude oil production will average 13.4 million barrels per day in 2025, reflecting continued growth in domestic output.
