Oil up with positive demand outlook in world's biggest crude consumers

By Zeynep Beyza Kilic

Oil prices increased on Thursday, supported by increasing demand in the US, the world's largest oil consumer, and softening inflation concerns in the US.

International benchmark Brent crude traded at $83.03 per barrel at 10.57 a.m. local time (0757 GMT), a rise of 0.34% from the closing price of $82.75 per barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $78.93 per barrel at the same time, a 0.38% increase from the previous session that closed at $78.63 per barrel.

US commercial crude oil inventories decreased by 2.5 million barrels to 457 million barrels during the week ending May 10, according to data released by the Energy Information Administration (EIA) late on Wednesday.

The EIA inventories showed a stock decline that far exceeded market expectations of a drop of around 400,000 barrels and signaled increased demand in support of higher prices.

Over the same period, gasoline inventories fell by approximately 200,000 barrels to 227.8 million barrels.

The latest Consumer Price Index data (CPI) in the US increased by 0.3% on a monthly basis in April, below market expectations.

Consequently, analysts perceive that the less-than-expected increase in consumer prices in April indicates a slowdown in inflation at the beginning of the second quarter while raising expectations of an interest rate cut in September.

Furthermore, China, the world's largest oil importer, announced plans to start issuing subsidized bonds worth 1 trillion yuan this week. According to a Ministry of Finance announcement, the bonds will be used to accelerate the economy's sluggish development, which, if successful, would drive up oil demand and spur higher prices.

Additionally, concerns about wildfires in Canada causing supply disruptions as they move closer to the country's major oil production hubs are driving up prices.

The forest fires that started in Western Canada over the weekend continue to increase in impact, affecting tens of thousands of acres of land and leading to the evacuation of thousands of people.