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Early Asian trading on Thursday saw a rise in oil prices, driven by increasing expectations of a Federal Reserve interest rate cut in September.
The market also bounced back from a previous selloff related to growing US inventories and OPEC+ plans to increase supply. Brent crude futures increased by 27 cents (0.34%) to $78.68 a barrel, while US West Texas Intermediate crude futures rose by 36 cents (0.49%) to $74.43.
A Reuters poll from May 31 to June 5 revealed that nearly two-thirds of economists are now anticipating an interest rate cut in September, countering recent bearish supply news. Lower interest rates can stimulate economic activity and boost oil demand by reducing the cost of borrowing.
Analysts at ANZ noted that the selloff in response to US inventory data may have been exaggerated, as prices rebounded after an initial fall on Wednesday. This rebound was driven by growing optimism about interest rate cuts.
However, the path of the Fed's interest rates is not guaranteed. The return to growth in the US services sector activity in May, following a contraction in the previous month, could potentially weaken the case for interest rate cuts.
Oil prices had previously dropped after OPEC and its allies agreed on Sunday to extend most of their oil output cuts into 2025, with room for gradual unwinding of voluntary cuts from eight members starting in October.
