Oil Prices Surge on Falling Inventories and Rising Geopolitical Tensions

Source The Ghana Report

Oil futures have surged sharply this week, driven by a significant draw in U.S. crude inventories and signs of a cooling job market that have fueled hopes of a potential Federal Reserve rate cut.

Lower interest rates could bolster oil prices, which have been under pressure due to tepid global demand.

EIA Report Fuels Price Increase

The U.S. Energy Information Administration (EIA) reported a notable decline in crude inventories, which fell by 2.5 million barrels to 457.1 million barrels for the week ending June 14. This drawdown exceeded analysts’ expectations of a 2.2 million-barrel decline. Additionally, U.S. gasoline stocks dropped by 2.3 million barrels, surpassing predictions of a 600,000-barrel build. Distillate stockpiles, including diesel and heating oil, also decreased by 1.7 million barrels against an anticipated rise of 300,000 barrels. This comprehensive reduction in inventories has significantly contributed to the bullish sentiment in the oil market.

Cooling Job Market and Federal Reserve Influence

Recent economic data has shown signs of a slowing U.S. job market, adding to the speculation that the Federal Reserve might cut interest rates to stimulate economic activity. The number of Americans filing for unemployment benefits increased more than expected to 229,000 for the week ending June 1, higher than the forecasted 220,000 claims. The Federal Reserve has maintained its benchmark rate in the 5.25% to 5.50% range.

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