Oil prices rose on May 1, rebounding from three days of losses that took prices to their lowest since mid-March.
Brent crude futures for July gained 79 cents, or 0.95%, to $84.23 a barrel by 0959 GMT. U.S. West Texas Intermediate (WTI) crude for June climbed 69 cents, or 0.87%, to $79.69.
Prices fell more than 3% to a seven-week low on May 1 after the U.S. Federal Reserve kept interest rates steady and warned of stubborn inflation, which could curtail economic growth this year and limit oil demand increases.
Crude was also pressured by an unexpected increase in U.S. crude inventories in data from the Energy Information Administration (EIA). Inventories were shown at their highest since June.
“The updated inventory statistics were probably the most salient price driver over the course of yesterday’s trading session,” said PVM analyst Tamas Varga.
Crude inventories rose by 7.3 million barrels to 460.9 million barrels in the week ended April 26, compared with the 1.1 million barrel draw expected by analysts in a Reuters poll.
Supporting the price recovery were ceasefire talks in the Israel-Hamas war and the potential for low prices to spur U.S. government buying for strategic reserves.
“As the impact of the U.S. crude stock build and the Fed signalling higher-for-longer rates is close to being fully baked in, attention will turn towards the outcome of the Gaza talks,” said Vandana Hari, founder of Vanda Insights.
In the Middle East, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight after a renewed push led by Egypt, though Israeli Prime Minister Benjamin Netanyahu has vowed to go ahead with a long-promised assault on the southern Gaza city of Rafah.
“The geopolitical temperature might have dropped a notch or two, but the climate remains hot,” Varga added. The U.S. has previously said it aims to replenish the Strategic Petroleum Reserve (SPR) after a historic sale from the emergency stockpile in 2022 and wants to buy back oil at $79 a barrel or less.
“The oil market was supported by speculation that if WTI falls below $79, the U.S. will move to build up its strategic reserves,” said Hiroyuki Kikukawa, president of NS Trading, owned by Nissan Securities. Shares of oil marketing companies (OMCs) surged by up to 8 per cent during intra-day trades on Thursday as crude oil prices fell to a two-month low on expectations of a ceasefire in West Asia.
Brent crude for July delivery was trading below the $84 mark at $83.22 per barrel after falling to a day’s low of $83.05 a barrel. They had hit the $91 mark last month following tensions between Israel and Iran.
During the day, shares of Indian Oil Corporation (IOC) ended with gains of 2.60 per cent at Rs 173.35 on the BSE after hitting an intra-day peak of Rs 174.50, a rise of 3.28 per cent.