Oil lifts for second day due in part to weaker dollar

London — Oil prices rose on Thursday, extending the previous session’s gains, on a bigger-than-expected weekly withdrawal from US crude storage and a weaker dollar after the US central bank signalled lower borrowing costs for 2024.

Brent futures was up $1, or 1.3%, to $75.26 a barrel as of 9am GMT. US West Texas Intermediate (WTI) crude climbed 80c, or 1.1%, to $70.27.

“Crude oil prices rebounded before the Fed meeting, and the event lifted them further,” said CMC Markets analyst Tina Teng in a client note.

The dollar dropped to a fresh four-month low on Thursday after the US Federal Reserve’s latest economic projections indicated the interest-rate hiking cycle had ended and lower borrowing costs were coming in 2024.

Fed Chair Jerome Powell said on Wednesday the historic tightening of monetary policy was likely over.

Lower interest rates reduce consumer borrowing costs, which can boost economic growth and demand for oil. A weaker dollar makes oil less expensive for foreign purchasers.

Prices were also boosted by a larger-than-expected draw from the US crude inventory, Teng added.

The US Energy Information Administration (EIA) said energy firms withdrew a bigger-than-expected 4.3-million barrels of crude from stockpiles in the week ended December 8 as imports fell.

Brent futures are down about 10% since Opec+ announced plans for a new round of production cuts on November 30. Opec+ includes Opec and allies such as Russia. 

Reuters