The price of oil rose by about 0.6%, helped by expectations of increased economic activity and demand for oil in the United States in response to the easing of the Fed's monetary policy. However, further price increases were limited by concerns about a slowdown in global demand for petroleum products, as well as Chinese data, which indicated an uneven recovery in the country's economy.
Investors also focused on yesterday's report from the Energy Information Administration, which showed that crude inventories increased by 1.357 million barrels in the week ended August 9. This was the first weekly rise in the U.S. crude inventories in seven weeks. Economists had predicted a fall of 2.000 million barrels. At the same time, gasoline stocks plunged by 2.894 million barrels. Analysts had foreseen a drop of 1.400 million barrels. Elsewhere, distillate stocks decreased by 1.673 million barrels. Analysts had anticipated a fall of 1.000 million barrels. Oil production reduced by 100,000 barrels a day to 13.300 million barrels per day. U.S. crude oil imports averaged 6.3 million barrels per day last week, logging a gain of 61,000 barrels per day from the week before.
Meanwhile, yesterday's US inflation data reinforced expectations that the Federal Reserve will cut interest rates as early as next month. Lower interest rates reduce the cost of borrowing, which can stimulate economic activity and increase demand for oil. According to the CME FedWatch Tool, markets see a 37.5% probability of a 0.5% rate cut in September, and a 45.7% probability of 0.25% rate cut in November.
Persistent geopolitical risks in the Middle East also continued to influence oil prices. Three senior Iranian officials have said that only a ceasefire deal in Gaza would hold Iran back from direct retaliation against Israel for the assassination.