Oil prices edged higher on Thursday as stronger-than-expected fuel demand in the United States and a weaker dollar bolstered crude oil demand.
Brent crude oil, against which Nigeria oil is priced, rose 34 cents or 0.5% to $71.12 per barrel while West Texas Intermediate (WTI) gained 42 cents, or 0.6% to $67.58 per barrel.
The price increase followed data from the U.S. Energy Information Administration (EIA), which showed that distillate inventories, including diesel and heating oil, declined by 2.8 million barrels last week—far exceeding the 300,000-barrel drop expected by analysts.
Weaker Dollar Supports Oil Prices
The weakening of the U.S. dollar, which has been on a downward trend since late February, contributed to the price gains.
A weaker dollar makes oil cheaper for holders of other currencies and increase demand for crude in international markets.
“Throughout the week, the weakness of the dollar appeared to provide some support for dollar-denominated oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Traders are also closely watching the Federal Reserve’s monetary policy with speculation that interest rates could be cut by 50 basis points by the end of the year. Lower interest rates tend to boost economic activity, which in turn increases energy consumption.
Geopolitical Risks and Market Volatility
Beyond demand fundamentals, oil markets remain volatile due to rising geopolitical risks. Israel launched a new ground operation in Gaza, breaking a nearly two-month ceasefire while the United States intensified airstrikes on Houthi targets in Yemen in response to attacks on ships in the Red Sea.
Meanwhile, OPEC+ members are expected to increase production in the coming months, a factor that could limit further price gains.
Analysts warn that while short-term demand remains strong, the combination of higher supply and macroeconomic uncertainty could lead to price fluctuations.
“I am expecting a choppy upward drift in the oil markets right now,” said Kelvin Wong, senior market analyst at OANDA, pointing to stimulus measures from China and Middle East tensions as key bullish drivers.
Looking Ahead
With oil demand in the U.S. remaining strong and supply-side uncertainties still in play, market watchers anticipate continued price fluctuations in the near term.
Traders will be monitoring inventory data, OPEC+ policy adjustments, and geopolitical developments for further price direction.
