Oil Prices Rise on Strong U.S. Crude Withdrawal and Weaker Dollar

LONDON—Oil prices continued to climb on Thursday, following gains from the previous session. This increase was driven by a larger-than-expected weekly withdrawal from U.S. crude storage and a weaker dollar after the U.S. central bank signaled lower borrowing costs for 2024.

Brent Futures and WTI Crude

Brent futures rose by $1, or 1.3 percent, reaching $75.26 per barrel as of 0900 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed 80 cents, or 1.1 percent, to $70.27.

Impact of the Fed Meeting

According to CMC Markets analyst Tina Teng, crude oil prices rebounded before the Federal Reserve meeting, and the event further lifted them. The dollar dropped to a fresh four-month low on Thursday after the U.S. Federal Reserve’s latest economic projections indicated the end of the interest rate hike cycle and the expectation of lower borrowing costs in 2024.

Fed Chair Jerome Powell stated on Wednesday that the historic tightening of monetary policy was likely over. Lower interest rates can reduce consumer borrowing costs, which in turn can boost economic growth and increase demand for oil. Additionally, a weaker dollar makes oil less expensive for foreign purchasers.

Positive Impact of U.S. Crude Withdrawal

Prices were also boosted by a larger-than-expected draw from U.S. crude inventory, according to analyst Tina Teng. The U.S. Energy Information Administration (EIA) reported that energy firms withdrew a bigger-than-expected 4.3 million barrels of crude from stockpiles in the week ended December 8, mainly due to a decrease in imports.

Effect of OPEC+ Production Cuts

Brent futures have experienced a decline of approximately 10 percent since OPEC+ announced plans for a new round of production cuts on November 30. OPEC+ consists of OPEC and allies such as Russia.