Oil prices held steady on Thursday, with Brent crude futures and West Texas Intermediate (WTI) crude gaining a modest 4 cents, or 0.05%, to $82.79 and $78.67 per barrel respectively by 1120 GMT.
The stabilization in oil prices was driven by a combination of factors, including a drop in U.S. crude oil, gasoline, and distillate inventories, reflecting a rise in both refining activity and fuel demand, as reported by the Energy Information Administration (EIA).
Crude inventories fell by 2.5 million barrels to 457 million barrels in the week ended May 10, outpacing the 543,000 barrel consensus analyst forecast in a Reuters poll. This reduction in stockpiles provided a positive signal for the market.
Furthermore, slower than expected inflation in the U.S. in April boosted financial market expectations for a September cut to interest rates by the Federal Reserve. This could potentially temper the strength of the U.S. dollar and make oil more affordable for holders of other currencies.
“Oil is making some moderate headway, buoyed by shrinking U.S. stockpiles and a wider risk-on mood triggered by signs of ebbing U.S. inflation, offering scope of looser Fed policy,” said MUFG analysts Ehsan Khoman and Soojin Kim in a note.
The geopolitical tensions in the Middle East, particularly the ongoing conflict between Israel and Gaza, also contributed to the stable oil prices, as investors closely monitor the situation for potential supply disruptions.