Oil prices edged higher Thursday after data signaled stronger US demand, while uncertainty over the Federal Reserve's (Fed) easing trajectory and international efforts to end the Russia-Ukraine war kept traders on edge.
Brent crude was trading at $66.97 per barrel at 10:35 a.m. local time (0735 GMT), up 0.7% from the previous close of $66.48.
The US benchmark West Texas Intermediate (WTI) rose 0.9% to $63.31, from $62.77 in the prior session.
US commercial crude oil inventories decreased by 1.4% during the week ending Aug. 15, according to the Energy Information Administration (EIA).
Inventories fell by around 6 million barrels to 420.7 million barrels, contrasting with a forecasted fall of 800,000 barrels. The fall underscored robust demand in the world's largest oil consumer and supported prices.
Moreover, rising expectations of a peace deal in the Russia-Ukraine war continue to influence prices.
While negotiations have eased supply concerns and capped gains, the prospect of sanctions on Russian crude being lifted is providing upside support.
Geopolitical risk intensified after Trump signed an executive order on Aug. 6 imposing a 25% tariff on India for continuing to import Russian oil. The measure takes effect on Aug. 27.
Russia, however, signaled it has a "special mechanism" to keep crude flowing to India despite US tariffs, a senior diplomat in New Delhi said Wednesday. The statement helped ease supply worries, restraining upward momentum in crude prices.
Meanwhile, Fed policy remains a key driver of prices. Minutes from the central bank's latest meeting showed most officials see inflation risks tilted to the upside, dampening expectations for aggressive easing.
Money markets now price an 82% chance of a September rate cut, with bets on two 25-basis-point reductions in total this year.
Lower rates are expected to boost growth and lift demand in oil-reliant sectors, supporting prices, according to analysts.
Investors are also awaiting remarks from Chair Jerome Powell at the Jackson Hole symposium on Aug. 22 for further clues on the policy path, with monetary policy shifts expected to play a crucial role in shaping energy demand.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr