(Reuters) – Oil prices rose on Thursday, rebounding from three days of losses that took prices to their lowest since mid-March.
Brent crude futures for July gained 58 cents, or 0.7%, to $84.02 a barrel by 1130 GMT. U.S. West Texas Intermediate (WTI) crude for June was up 47 cents, or 0.6%, at $79.47.
Prices fell more than 3% to a seven-week low on Wednesday 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.
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.
While OPEC and its allies have yet to begin formal talks on extending voluntary oil output cuts beyond June, three sources from OPEC+ producers said such an extension could be agreed if demand fails to pick up.
“However, with 2025 oil balances looking in greater surplus due to non-OPEC+ supply growing faster than demand, we think OPEC+ should feel increasing pressure to unwind cuts going into next year,” Citi analysts said in a note late on Wednesday.
Supporting the price recovery was the potential for lower prices to spur U.S. government buying for strategic reserves.
“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.
Oil giant Shell comfortably beat expectations in the first quarter.
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.
In the Middle East, meanwhile, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight after a renewed push led by Egypt.
A deal on that front could take out some of the geopolitical risk premium that has buoyed oil prices in recent months, though Israeli Prime Minister Benjamin Netanyahu has vowed to proceed 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,” said PVM analyst Tamas Varga.
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