Investing.com– Oil prices rose in Asian trade on Thursday, extending recent gains as weakness in the dollar ahead of key U.S. inflation data benefited price, while bets on tighter global supplies remained in play.
The dollar nursed steep losses this week, with focus turning largely towards upcoming consumer price index inflation data for more cues on U.S. interest rates.
Data showing an unexpected draw in U.S. oil inventories supported crude markets, although an outsized build in distillates limited overall optimism over tighter supplies. Weak inflation data from top oil importer China also dented sentiment towards oil.
expiring in September rose 0.7% to $85.74 a barrel, while rose 0.8% to $81.69 a barrel by 21:16 ET (01:16 GMT).
Dollar slips as rate cut bets grow before CPI data
Oil prices benefited from a weaker , as the greenback retreated after Federal Reserve Chair Jerome Powell flagged said the U.S. economy was still headed for a soft landing.
Powell also said that the Fed did not need to wait for inflation to fall below its 2% target to begin trimming rates. His comments dented the dollar and put focus squarely on upcoming CPI data, which is expected to show some cooling in inflation in June.
A softer dollar benefits crude demand by making oil cheaper for international buyers.
US inventories unexpectedly shrink, but distillates rise
Official data showed on Wednesday that U.S. unexpectedly shrank in the week to July 5, amid increased demand due to summer holiday travel.
But doubts persisted over just how strong U.S. demand was, especially as unexpectedly grew during the week.
Still, traders were positioning for tighter U.S. markets in the coming weeks, with summer travel set to continue, while hurricane Beryl was also seen causing some disruptions in oil production in the Gulf of Mexico.
The Organization of Petroleum Exporting Countries maintained its forecast for relatively strong global oil demand growth in 2024 and 2025, stating that resilience in the global economy and resurgent air travel will underpin demand.
The International Energy Agency is set to release its later on Thursday. The agency has maintained a less optimistic forecast on demand than OPEC.