September West Texas Intermediate (WTI) crude oil settled higher on Thursday, boosted by strength in Brent crude, which surpassed $84 a barrel for the first time since April.
The surge was fueled by supply tightness resulting from production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. These cuts, along with some involuntary outages, have supported the oil market, resulting in four consecutive weeks of gains.
Despite Wednesday’s drop in oil prices, the overall outlook remains positive. The U.S. Federal Reserve’s interest rate hike and lower-than-expected U.S. crude inventories were contributing factors to the temporary setback. However, market analysts still hold a favorable view on oil, expecting WTI crude to climb to a range of $82 to $88 in the coming months.
Risk appetite in the broader financial markets is on the rise as expectations grow that central banks, like the Federal Reserve, are approaching the end of their policy tightening campaigns. This development bodes well for global growth and energy demand, further bolstering the outlook for oil prices.
The U.S. economy also provided support to the market, with government data revealing a stronger-than-expected 2.4% growth in the last quarter. This growth was driven by a resilient labor market, which boosted consumer spending, and increased business investments in equipment, reducing the risk of a recession.