Oil prices pick up on prospect of US replenishing strategic reserve

Brent crude oil price news: Oil prices rose on Thursday on the prospect the US may start buying crude for its petroleum reserve, after prices sank to a seven-week low on hopes for an Israel-Gaza ceasefire, doubts about US interest rate cuts and swelling oil inventories.

Snapping three days of losses, Brent crude futures for July gained 21 cents, or 0.3 per cent, to $83.65 a barrel by 0026 GMT. US West Texas Intermediate (WTI) crude for June climbed 22 cents, or 0.3 per cent, to $79.22 a barrel.

Both benchmarks fell more than 3 per cent on Wednesday to a seven-week low. "The oil market was supported by speculation that if WTI falls below $79, the US will move to build up its strategic reserves," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

The US aims to replenish its 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.

Both benchmarks fell more than 3 per cent on Wednesday to a seven-week low. "The oil market was supported by speculation that if WTI falls below $79, the US will move to build up its strategic reserves," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

The US aims to replenish its 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 US Energy Information Administration (EIA) said crude inventories rose by 7.3 million barrels to 460.9 million barrels in the week ended April 26, compared with analysts' expectations in a Reuters poll for a 1.1 million-barrel draw.

Crude stocks were at the highest point since June, the EIA said. Meanwhile, the US Federal Reserve held interest rates steady on Wednesday and signalled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.

The Fed's latest policy statement did note that "inflation has eased". Any delay in rate cuts could slow economic growth and dampen demand for oil.