Brent crude futures rose 31 cents, or 0.40%, to $78.72 a
barrel by 0330 GMT, while U.S. West Texas Intermediate crude futures climbed 41
cents, or 0.55%, to $74.48.
Nearly two-thirds of economists are now predicting an
interest rate cut 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 incentivise economic activity and boost oil demand.
However, the Fed's interest rate path is far from a foregone
conclusion as U.S. services sector activity, which accounts for the vast
majority of the country's economic output, returned to growth in May after a
contraction in the previous month. That could potentially weaken the case for
interest rate cuts.
The oil benchmarks were still headed for weekly declines of
about 4% as of Thursday, weighed down by the latest supply decision from the
Organization of the Petroleum Exporting Countries and allies.
The group agreed on Sunday to extend most of their oil
output cuts into 2025, but left room for voluntary cuts from eight members to
be unwound gradually, beginning in October.
"We believe the OPEC+ move to unwind the 2.2 million
barrels per day in the final quarter of 2024 will add further pressure to
benchmark prices," said Emril Jamil, senior analyst for crude at LSEG Oil
Research.
Bearish sentiments are also expected to prevail on
expectations of weaker demand as inventory builds, said Jamil.
Saudi Arabia has also cut its official selling prices (OSP)
for July crude, a document seen by Reuters showed on Wednesday. The move came
amid falling Middle East crude benchmarks and weaker profit margins for Asian
refiners.
Meanwhile, U.S. crude stocks jumped by 1.2 million barrels
in the week to May 31, compared with analysts' estimates for a draw of 2.3
million barrels, data from the U.S. Energy Information Administration showed.