Oil prices increased on Wednesday with a demand surge in the U.S., the world’s biggest crude consumer, and weakened U.S. dollar index, while a cease-fire deal in the Middle East dampened supply woes among market players.
The international oil benchmark of Brent crude rose 0.43% to $72.49 per barrel at 9.58 a.m. local time (0658 GMT), up from the previous session’s close of $72.18.
The U.S. benchmark West Texas Intermediate also increased by 0.43% to $68.83 per barrel, compared to $68.53 at the prior session’s close.
Data from the American Petroleum Institute (API) showed a larger-than-expected drop in U.S. crude oil stocks which supported the upward movement in prices.
API reported a decrease of 5.93 million barrels in U.S. commercial crude inventories last week, contrary to market expectations of a 250,000 barrel increase, fostering optimism regarding rising demand in the U.S.
The U.S. Energy Information Administration is set to release its official inventory report during the day.
Also, the weakening of the U.S. dollar against other currencies aided the rise in oil prices.
The U.S. dollar index, which measures the U.S. dollar’s value against other currencies, fell 0.15% to 106.809. The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies.
Meanwhile, the cease-fire agreement reached between Lebanon and Israel came into force at 4 a.m. local time.
Under the cease-fire deal, the Lebanese Armed Forces will be deployed to the southern border of Lebanon within 60 days and will ensure control of this region.
U.S. President Joe Biden stated that an international coalition led by the U.S. and France will support the implementation of the ceasefire agreement.
Experts are hopeful that the cease-fire deal could pressure Israel to stop its aggression on Gaza.