By Adedapo Adesanya
Oil closed higher on Thursday, supported by a bigger draw than expected in crude inventories in the United States but remain pressured by fears of rising interest rates.
Brent crude futures rose by 31 cents or 0.4 per cent to $74.34 a barrel, while the US West Texas Intermediate (WTI) crude futures improved by 30 cents or 0.4 per cent to $69.86 a barrel.
Both benchmarks gained about 3 per cent after the US Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the draw expected by analysts.
Crude traders are looking at rising interest rates with fears of a global recession while also worried about elevated travel demand and shrinking crude supplies.
The US Federal Reserve Chair, Mr Jerome Powell, has not helped quell the tension as he reiterated that he expects the moderate pace of interest rate decisions to continue in the coming months.
However, Atlanta Federal Reserve President, Mr Raphael Bostic, reiterated his belief that moderating inflation should keep the central bank from raising its short-term rate target again.
European Central Bank (ECB) President Christine Lagarde has cemented expectations for a ninth consecutive rise in eurozone rates in July.
Adding to the pressure was the annual profits at industrial firms in China, the world’s second-biggest oil consumer, which extended a double-digit decline in the first five months as softening demand squeezed margins.
Industrial earnings contracted by 12.6 per cent from a year earlier, according to data from the China National Bureau of Statistics (NBS) released on Wednesday, while profits were down 18.2 per cent in April.
This has reinforced hopes of more policy support to bolster a stuttering post-COVID economic recovery.
China’s oil demand has been on the rise so far this year despite mixed signals coming from its monthly economic indicators.
In the US, demand for fuels has reached the highest since December, and jet fuel demand has risen to the highest since this time last year, which is a good indicator for oil markets.
Saudi Arabia earlier this month pledged to sharply cut its output in July, adding to a broader deal by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+, to limit supply into 2024.
