Oil prices rise on hopes that falling US interest rates will boost demand for the fuel By Reuters

By Yuka Obayashi

TOKYO (Reuters) – Oil prices rose on Thursday, clawing back some of the previous day’s losses on hopes that potential U.S. interest rate cuts will boost economic activity and demand for the fuel, although lingering worries about slowing global demand capped the earnings.

Futures were up 17 cents, or 0.2 percent, at $79.93 a barrel by 0029 GMT. U.S. West Texas Intermediate crude was up 23 cents, or 0.3 percent, at $77.21 a barrel.

Both benchmarks fell more than 1 percent on Wednesday after stocks rose unexpectedly and on easing concerns about a broader conflict in the Middle East.

U.S. consumer prices rose moderately in July and annual inflation fell below 3 percent for the first time in nearly 3 1/2 years, bolstering expectations that the Federal Reserve will cut interest rates next month.

“We saw a correction in trade with Asia as the oil market was oversold on Wednesday,” said Yuki Takashima, economist at Nomura Securities, adding that investors were betting the Fed could start cutting rates next month.

“However, oil prices are expected to remain under pressure going forward as concerns remain that global demand, particularly in China, will be sluggish,” Takashima said, predicting WTI to head towards $72 early the month of August.

U.S. crude inventories rose 1.4 million barrels in the week ended Aug. 9, compared with estimates for a 2.2 million barrel draw, building for the first time since late June, they showed Energy Information Administration (EIA) data on Wednesday. (EIA/S)

Earlier this week, the International Energy Agency cut its 2025 forecast for oil demand growth, citing the impact of a weakened Chinese economy on consumption. This came after OPEC cut its forecast demand for 2024 for similar reasons

Globally, demand for jet fuel is also poised to ease as a slowdown in consumer spending hits travel budgets, a shift that could weigh on oil prices in the coming months.

Offsetting demand concerns and supporting oil prices, investors remain concerned about Iran’s potential response to the killing of the leader of the Palestinian Islamist group Hamas last month. Three senior Iranian officials said only a Gaza ceasefire would prevent Iran from retaliating directly against Israel for the assassination.

Hamas said on Wednesday it would not take part in a new round of Gaza ceasefire talks scheduled for Thursday in Qatar, dampening hopes for a negotiated truce.