By Nicole Jao
(Reuters) -Oil prices settled up more than 1% on Thursday, as expectations for a U.S. interest rate cut in a few weeks fueled a rebound after four days of price declines.
futures settled up $1.17, or 1.54%, to $77.22 a barrel. U.S. West Texas Intermediate crude futures gained $1.08, or 1.5%, to $73.01.
On Wednesday, minutes of the Federal Reserve’s July meeting showed most Fed officials thought the central bank was on track for an interest rate cut next month.
Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.
“The dollar has been sold off on the interest rate cut news,” said John Kilduff, Partner at Again Capital. “Everyone is now talking about the Fed cutting rates by 50 basis points, which would be significant,” he said.
Fed Chair Jerome Powell is due to speak on Friday at the annual central banking conference in Jackson Hole, Wyoming. Traders will look for any insight into whether Powell expects to cut rates by 25 or 50 basis points.
The U.S. dollar has fallen recently on concerns about a weakening economy, supporting oil prices as buyers using other currencies pay less for dollar-denominated crude.
On Thursday, the U.S. Labor Department said the number of jobless claims ticked up last week, but appeared to be steadying near a level consistent with gradual cooling of the labor market. This set the stage for interest rate cuts.
Also supporting oil prices, a U.S. government report on Wednesday showed crude, gasoline and distillate inventories fell by more than expected last week, a sign of demand picking up.
In the Middle East, Iran-aligned Houthi militants continued attacks on international shipping in solidarity with Palestinians in the war between Israel and Hamas.
A Greek-flagged oil tanker carrying 150,000 tonnes of crude that was evacuated by its crew after being attacked in the Red Sea now poses an environmental hazard, the EU’s Red Sea naval mission “Aspides” said on Thursday.
Investors are watching OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, which may reconsider its plan to gradually unwind some output cuts in October.
OPEC+ has said the plan to raise output could be paused or reversed if needed.