Oil prices rose in early Thursday trading, recovering some of the losses from the previous session. The market was buoyed by hopes that a potential cut in U.S. interest rates could stimulate economic activity and fuel demand. However, ongoing concerns about a global demand slowdown capped the gains.
Brent crude futures climbed 17 cents, or 0.2%, to $79.93 per barrel by 00:29 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude increased by 23 cents, or 0.3%, to $77.21 per barrel.
Both benchmarks had fallen by over 1% on Wednesday following the unexpected rise in U.S. crude inventories and a reduction in fears about the escalation of conflict in the Middle East.
Yuki Takashima, an economist at Nomura Securities, commented, "We witnessed a correction in Asian trading, as Wednesday's oil market sell-off was excessive." He added that investors are betting on the Federal Reserve beginning to cut interest rates next month.
He continued, "However, oil prices are expected to remain under pressure in the coming period as global demand concerns persist, particularly in China." He predicted that WTI crude could head toward the $72 mark in early August.
Data from the U.S. Energy Information Administration on Wednesday revealed that U.S. crude oil inventories rose by 1.4 million barrels in the week ending August 9, compared to estimates of a 2.2 million barrel decline. This marks the first increase in inventories since late June.
Earlier this week, the International Energy Agency reduced its 2025 oil demand growth estimates, citing the impact of a weakening Chinese economy on consumption. This followed a similar move by OPEC, which cut its demand forecast for 2024 for similar reasons.
Amid demand concerns, oil prices were also supported by investor anxiety over Iran's potential response to the killing of a Hamas leader last month. Three senior Iranian officials stated that only a ceasefire agreement in Gaza would prevent Iran from retaliating directly against Israel for the assassination.
On Wednesday, Hamas announced it would not participate in a new round of ceasefire talks in Gaza scheduled for Thursday in Qatar, dampening hopes for a negotiated truce.
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