Dec 14, 2023: In Asian trading on Thursday, oil prices continued their climb, building on previous gains, driven by a larger-than-anticipated weekly reduction in U.S. crude reserves and optimistic demand prospects following indications from the U.S. Federal Reserve about potential lower borrowing costs in 2024.
Brent futures edged up by 23 cents, marking a 0.31% increase, settling at $74.49 per barrel by 0345 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude advanced by 11 cents, a 0.16% rise, settling at $69.58 per barrel.
The market’s uptrend gained momentum in the prior session due to concerns surrounding the security of oil supplies in the Middle East following a tanker attack in the Red Sea.
According to CMC Markets (LON:CMCX) analyst Tina Teng, “Crude oil prices rebounded before the Fed meeting, and the event further bolstered them.”
Lower interest rates typically reduce consumer borrowing costs, potentially stimulating economic growth and, consequently, increasing demand for oil. Additionally, this news led to a decline in the dollar for three consecutive sessions, reaching a four-month low, consequently making oil more affordable for foreign buyers.
Teng highlighted that prices received a boost from a more substantial than predicted draw from U.S. crude inventories.