Oil prices has been trending up due to positive demand expectations in top two world crude oil consumers – the United States, China.
Brent crude rose by 0.2% to $74.85 per barrel while The US benchmark West Texas Intermediate (WTI) increased by 0.3% to $71.76 per barrel.
Uncertainty surrounding the actions of the incoming U.S. administration and the roadmap the Federal Reserve (Fed) will follow this year continues to influence the oil markets.
The concern of recession and inflation worldwide also affects asset prices. Expectations of increased fossil energy investments in the US, the world’s largest oil-consuming country, driven by the policies of US President-elect Donald Trump set to take effect on Jan.20, are supporting price increases.
The American Petroleum Institute (API) reported a drawdown in US commercial crude oil inventories for the week ending Dec. 27.
API data indicated a 1.4 million barrel decline, though it remained below market expectations of a 3 million barrel fall. The drop in stocks suggests strengthening demand in the US, the world’s largest oil consumer.
The US Energy Information Administration will release official inventory data later on Thursday. The weakening of the US dollar against other currencies aided the rise in oil prices. The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies.
The US dollar index, which measures the US dollar’s value against other currencies, fell 0.15% to 108.135. Expectations of economic growth in China, the world’s largest crude importer, are driving demand growth projections and influencing upward price movement.