Oil rises on strong US fuel demand, dollar decline amid Fed rate cut talk

Oil prices found some support on Thursday on the back of positive demand expectations in the US, the world’s largest oil consumer and a weaker dollar.

International benchmark Brent crude increased by around 0.02%, trading at $69.62 per barrel at 10.13 a.m. local time (0713 GMT), up from $69.60 at the previous session’s close.

Similarly, US benchmark West Texas Intermediate (WTI) increased by 0.01%, settling at $67.30 per barrel, compared to $67.29 in the prior session.

The US Energy Information Administration (EIA) reported that gasoline inventories in the country fell by around 2.7 million barrels last week, indicating strong fuel demand during the July 4 holiday season.

The decline of the US dollar against other currencies aided the rise of oil prices. The US dollar index, which measures the US dollar’s value against other currencies, decreased by 0.15% to 97.055 at 0724 GMT compared to Wednesday’s closing price.

The weak dollar is expected to raise demand by making oil cheaper for those who use foreign currencies.

Additionally, minutes released Wednesday from the US Federal Reserve’s (Fed) recent meeting showed that most Fed officials consider it appropriate to cut policy rates this year, while a few are open to a rate cut as early as July.

Trump, posting on his Truth Social account, argued that the policy interest rate is at least three points too high and renewed his call for rate cuts.

Lower interest rates tend to weaken the US dollar, which in turn would boost demand.

Meanwhile, comments from US President Donald Trump on trade tariffs remain in focus for markets. Maintaining his tariff threats against BRICS, Trump stated: “Any country aligning itself with BRICS’ anti-American policies will face an additional 10% tariff. There will be no exceptions.”

Trump also announced new tariff letters targeting seven more countries: the Philippines, Brunei, Moldova, Algeria, Iraq, Libya, and Sri Lanka.

During a meeting with African leaders, he complained that some African countries impose very high tariffs on US products, which he pledged to lower. Trump added that Brazilian products would face a separate 50% customs duty across all sectors.

These developments continue to weigh on the global economy and exert downward pressure on oil prices.

By Humeyra Ayaz