Oil prices resume gains on hopes the world economy is rebounding

Oil prices extended their gains in American trade on Thursday away from one-week lows, resuming strong gains after a two-day hiatus.

The gains come amid hopes the pressures facing world economies are subsiding as global central banks pause their aggressive policy tightening measures.

Prices are also boosted by the steep drop in US crude stocks last week in a positive sign for demand. 

Global Oil Prices

US crude rose 1.9% to $90.94 a barrel, with a one-week trough at $88.42, while Brent climbed 1.6% to $94.56 a barrel, with a one-week trough at $92.24.

On Wednesday, US crude lost 1.6%, while Brent slipped 1.3%, the second loss in a row on profit-taking off ten-month highs.

Global Economy 

Global central banks including in Switzerland, Britain, the US, have all decided to pause interest rate hikes to gauge economic response. 

Such a step will likely be followed by steps to support the economy early in 2024, which could include interest rate hikes.

A rebound in global economic conditions will obviously boost fuel demand. 

US Stocks 

The Energy Information Administration reported a drop of 2.1 million barrels in US crude stocks last week, while analysts expected a drop of 1.3 million barrels.

Gasoline stocks fell 800 thousand barrels to 219.5 million barrels, as distillate stocks fell 2.9 million barrels to 119.7 million barrels.

US Production

The EIA also reported no change in US production at 12.9 million barrels, the highest since March 2020.