WionDrive News Desk 
Oil prices went through a decline on Thursday as data pointing to resilient U.S. economic activity raised concerns that borrowing costs might remain elevated for an extended period, potentially dampening demand. Ahead of the release of U.S. crude oil stockpile data later in the day, Brent futures fell by 26 cents, or 0.3%, to $83.34 per barrel as of 0630 GMT, while U.S. West Texas Intermediate (WTI) crude dropped by 23 cents, or 0.3%, to $79.00 per barrel.
Both benchmark prices are headed for monthly losses, with Brent futures on track for a decline of more than 5% compared to the previous month, and WTI poised for a slide of over 3%.
Yeap Jun Rong, a market strategist at IG, stated, “The broader risk-off environment has translated to some downward pressures on oil prices, which overrides the larger-than-expected drawdown in U.S. crude inventories from the recent API data.”
According to market sources citing American Petroleum Institute (API) figures on Wednesday, U.S. crude oil and gasoline inventories fell last week, while distillate levels rose. The API data showed that crude stocks decreased by 6.49 million barrels in the week ended May 24, with gasoline inventories down by 452,000 barrels and distillates up by 2.045 million barrels.
Analysts had projected that U.S. energy firms would withdraw 1.9 million barrels of crude from storage, while adding 0.4 million barrels of distillates and 1 million barrels of gasoline.
The official data from the U.S. Energy Information Administration (EIA) is due for release later on Thursday.
OPEC+ delegates and analysts suggest that rising global oil inventories through April, due to soft fuel demand, may strengthen the case for OPEC+ producers, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to maintain supply cuts when they meet on June 2.
Yeap added, “A greater driver for oil prices ahead may revolve around the upcoming OPEC+ meeting this weekend, which could see OPEC members extending their current production cuts potentially till the end of the third quarter to support prices.”
Oil markets have been under pressure due to expectations that the Federal Reserve will keep interest rates higher for longer, with Brent settling at its lowest level in more than three months on May 23. A Fed survey showed that U.S. economic activity continued to expand from early April through mid-May, but firms grew more pessimistic about the future, while inflation increased at a modest pace.
Higher borrowing costs tend to restrict funds and consumption, which is negative for crude demand and prices. The Fed is now expected to begin cutting rates in September at the earliest, compared to the previously anticipated June start by markets at the beginning of the year.
