By Robert Harvey and Arunima Kumar
LONDON (Reuters) – Oil prices steadied on Thursday, with benchmark crude holding above $85 a barrel as investors weighed a bleak demand growth outlook from the International Energy Agency and signs of growing U.S. consumption.
Brent crude futures were up 1 cent, or 0.01 percent, at $85.09 a barrel by 1207 GMT. Meanwhile, U.S. West Texas Intermediate crude fell 9 cents, or 0.11 percent, to $82.01.
In its latest monthly oil market report, the International Energy Agency forecast that global oil demand growth would fall to its lowest level in more than a year at 710,000 barrels per day in the second quarter, mainly reflecting a contraction in Chinese consumption.
The International Energy Agency left its forecast for global crude oil demand growth in 2024 largely unchanged at 970,000 barrels per day (bpd), while its forecast for 2025 was cut by 50,000 bpd to 980,000 bpd.
OPEC left its forecast for global oil demand growth this year and next unchanged at 2.25 million and 1.85 million barrels per day, respectively, in its monthly report on Wednesday.
U.S. crude oil and gasoline futures rose on Wednesday, breaking a three-day losing streak, after a report from the U.S. Energy Information Administration showed a decline in gasoline inventories.
“The rebound is largely due to continued declines in US inventories as reported by the US Energy Information Administration,” Suvro Sarkar of DBS Bank’s energy sector team told Reuters.
U.S. crude inventories fell by 3.4 million barrels to 445.1 million barrels in the week to July 5, far more than the 1.3 million-barrel draw analysts had expected in a Reuters poll.
Gasoline stocks fell by 2 million barrels to 229.7 million barrels, much larger than the 600,000-barrel draw analysts had expected during the U.S. Fourth of July holiday week.
US CPI inflation data is due at 1230 GMT, which could provide fresh evidence on the health of demand. The PPI inflation report is due on Friday.
On Wednesday, Federal Reserve Chairman Jerome Powell raised expectations that the central bank will ease policy in September, as markets currently expect. However, Powell was reluctant to conclude that inflation is moving sustainably toward the bank’s 2% target, stressing that the decision to cut rates will depend on the data.
Easing interest rates could be positive for oil because cheaper credit could lead to increased consumer demand in general.