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Brent crude futures were up 25 cents or 0.3% at $78.66 a barrel
by 1005 GMT. U.S. West Texas Intermediate crude futures were up
31 cents or 0.4% at $74.38.
Oil benchmarks rose more than 1% on Wednesday, recovering after
sliding by nearly $8 a barrel over the five sessions through
Tuesday.
Nearly two-thirds of economists are now predicting the Fed will
cut interest rates in September, according to Reuters' May
31-June 5 poll, offsetting recent bearish supply news.
Lower interest rates decrease the cost of borrowing, which can
incentivize economic activity and boost oil demand.
Prices were still headed for weekly declines of more than 3%.
Trading house Trafigura's chief economist Saad Rahim said that
the decision by producer group OPEC+ to phase out some of its
output cuts from October, combined with strong supply in the
products market, has driven oil prices lower.
OPEC+, which groups members of the Organization of the Petroleum
Exporting Countries (OPEC) and allies, agreed on Sunday to
extend most of their production cuts into 2025, but left room
for voluntary cuts from eight members to be unwound gradually.
OPEC Secretary General Haitham Al Ghais and Russian Deputy Prime
Minister Alexander Novak defended the OPEC+ deal, expressing
optimism about continued strong demand for oil.
"Oil markets have over-reacted to the mildly negative OPEC+
meeting outcome. Demand indicators have certainly softened
somewhat recently, but are not falling off a cliff," Barclays
analyst Amarpreet Singh wrote in a note.
Meanwhile, U.S. crude stocks jumped by 1.2 million barrels in
the week to May 31 while analysts had expected a drawdown of 2.3
million barrels, data from the U.S. Energy Information
Administration showed.
"Summer inventory draws should be enough to get Brent oil back
into the high $80s-$90 range by September," but prices could
come under pressure in 2025 from slower demand and non-OPEC
supply growth, J.P.Morgan analysts wrote in a note.
They forecast Brent to average $83 this year and $75 next year.
(Reporting by Deep Vakil in Bengaluru, Robert Harvey in London,
and Jeslyn Lerh in Singapore; Additional reporting by Colleen
Howe in Beijing; editing by Varun H K and Jason Neely)
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