By Zeynep Beyza Kilic
Oil prices increased on Thursday ahead of the release of US inflation data, the world's biggest oil consumer, and ongoing tension in the Red Sea, which is escalating concerns about global supply disruptions.
The international benchmark crude Brent traded at $77.41 per barrel at 0719 GMT, a 0.79% increase from the closing price of $76.80 a barrel in the previous trading session on Wednesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $71.92 per barrel, up 0.77% from Wednesday's close of $71.37 per barrel.
Later on Thursday, the US consumer price index will be announced. Analysts predict that the US Federal Reserve (Fed) will use this inflation data when making future interest rate decisions. Experts predict that the Fed will maintain current interest rates at its January meeting, but the first interest rate decrease may occur at its March meeting.
The financial results of major US banks, including JPMorgan Chase, Citibank, Bank of America and Wells Fargo, to be released Friday will offer economic activity indicators. Should the outcome signal an uptick in activity, oil demand will subsequently rise to buoy prices further.
Ongoing tension in the Red Sea continues to impact oil prices. Following the recent action of the Houthis in Yemen against commercial ships in response to Israel's attacks on Gaza, many shipping companies decided to stop their voyages in the Red Sea.
The majority of the world's oil reserves are found in the Middle East, where tensions are still on the rise. This is raising fears that disruptions to energy exports could lead to a global supply chain crisis.
The weakening of the US dollar against other currencies also aided oil price rises by bolstering trade with foreign currency traders, who were encouraged to buy cheaper dollar-indexed oil.
The US dollar index, which measures the US dollar's value against other currencies, fell 0.15% to 101.927 at 10.12 a.m. local time (0712 GMT).
Meanwhile, official stock data released by the US Energy Information Administration (EIA) on Thursday revealed that stocks in the US, the world's largest oil-consuming country, increased by 1.3 million barrels to 432.4 million barrels. This stock rise signals slowing demand and is contrary to the market expectation of a 1.2-million-barrel inventory drop.