Oil prices rise on US crude output; jobs data flows rate reduce hopes

By Deep Kaushik Vakil and Robert Harvey

(Reuters) – Oil futures rose on Thursday after the U.S. Energy Information Administration (EIA) reported a pullback in crude and data showing a cooling job market fueled hopes that the Federal Reserve would could cut interest rates soon.

Brent crude futures settled at $85.71 a barrel, up 64 cents, or 0.75%. The session high of $85.89 was the highest since May 1.

US West Texas Intermediate (WTI) futures for July, which expire on Thursday, ended at $82.17 a barrel, up 60 cents, or 0.74%.

“The market is definitely going up,” said Phil Flynn, analyst at Price Futures Group.

Crude stockpiles fell by 5.9 million barrels in the week to June 15, compared with analysts’ expectations for a 1.9 million barrel drop.

Crude stockpiles at the delivery hub in Cushing, Oklahoma, fell by 1.3 million barrels, the EIA said.

There was no WTI settlement on Wednesday due to a US public holiday, which kept trading largely light. The more active August contract rose 60 cents to $81.31.

The number of Americans filing new claims for unemployment benefits fell last week.

Labor market momentum declined in tandem with the overall economy as the Fed tightened policy to combat inflation. With that pressure easing, a rate cut this year remains on the table.

Lower rates could support oil prices, which have been dragged this year by weak global demand. A US rate cut would reduce borrowing in the world’s largest economy, boosting appetite for oil as production rises.

Oil prices are also likely to remain supported by a rising geopolitical risk premium driven by the Middle East conflict, ActivTrades analyst Ricardo Evangelista said.

Israeli forces pounded areas in the central Gaza Strip overnight, while tanks deepened their advance into Rafah in the south.

However, expectations of building inventories appear to be overshadowing fears of escalating geopolitical stress for now, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

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A summer surge in oil demand, refineries and ongoing weather risks added to extended production cuts by the OPEC+ producer group mean that “oil balance sheets should tighten and inventories should start to draw summer months,” JPMorgan commodities analysts wrote.

The Bank of England kept its main interest rate unchanged at a 16-year high of 5.25% ahead of Britain’s July 4 national election.

(Reporting by Erwin Seba; additional reporting by Robert Harvey and Paul Carsten in London, Deep Vakil in Bengaluru, Laila Kearney in New York and Jeslyn Lerh in Singapore; Editing by David Goodman, Jan Harvey, David Gregorio and Deepa Babington)