Oil prices rose modestly on Wednesday following a drop in U.S. crude inventories and an expected interest rate cut by the Federal Reserve. Brent crude closed up 20 cents (0.27%) at $73.39 a barrel, while U.S. West Texas Intermediate (WTI) gained 50 cents (0.71%) to settle at $70.58. However, both benchmarks retreated from session highs, where they had climbed over $1 per barrel.
The Energy Information Administration (EIA) reported declines in U.S. crude and distillate inventories for the week ending December 13, while gasoline stocks rose. Demand, measured as total product supplied, reached 20.8 million barrels per day, up 662,000 barrels from the prior week, reflecting improved market sentiment. “The market seems to have turned a corner from the negativity of recent weeks, with more optimism about demand,” said Phil Flynn, senior analyst at Price Futures Group.
The Federal Reserve’s quarter-point interest rate cut—already anticipated by markets—signaled a slower pace of reductions moving forward. Central bankers projected only two more 25-basis-point cuts through 2025. The announcement lifted the U.S. dollar to a year-to-date high, exerting downward pressure on oil prices due to the higher cost of crude in other currencies. While lower interest rates typically support economic growth and oil demand, the stronger dollar and cautious Fed outlook tempered the day’s gains.