LONDON: Oil prices edged higher on Thursday, boosted by the U.S. Federal Reserve signalling a possible start to interest rate cuts.
There was limited immediate price impact after two OPEC+ sources said that the Thursday meeting of the group of oil-producing countries - including Saudi Arabia, Russia and allies - left production policy changes off its agenda.
Brent crude futures were up 68 cents at $81.23 a barrel by 1140 GMT. U.S. West Texas Intermediate crude futures gained 65 cents to $76.50.
OPEC+ will soon have to decide whether to extend beyond March the 2.2 million barrels per day (bpd) of voluntary oil production cuts announced last November.
Federal Reserve Chair Jerome Powell on Wednesday said that interest rates had peaked and would move lower in coming months, with inflation continuing to fall and an expectation of sustained economic growth.
Oil dips on faltering China economy, US crude stock build
Lower interest rates and economic growth help oil demand.
But Powell declined to promise that rate cuts would come as early as the Fed’s March 19-20 meeting, as investors had hoped.
China, the world’s second-biggest economy, revealed new support measures to help to reduce fallout from the liquidation of property developer Evergrande.
Analysts at JPMorgan said they expected China to remain the single largest contributor to global oil demand growth in 2024, forecasting that Chinese demand would grow by 530,000 barrels per day (bpd), having jumped by 1.2 million bpd last year.
“Geopolitics aside, our view remains that 2024 will be fundamentally a healthy year for the oil market and we recommended using December’s sell-off as a buying opportunity,” JPMorgan said in a client note.
In another glimmer of better economic news, the downturn in Germany’s manufacturing sector eased in January, a survey showed on Thursday.
In the Middle East, worries over attacks by Yemen-based Houthi forces on shipping in the Red Sea are driving up costs and disrupting global oil trading. The Houthi group also said it would keep up attacks on U.S. and British warships in what it called acts of self defence.
“The energy market remains on edge as it waits for a U.S. response to the drone attack on American troops in Jordan,” ANZ Research said in a note.
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