Oil drops on Thursday

Oil dropped following a three-day rally, as investors assessed an unexpected rise in US crude reserves and the prospects of a prolonged tightening in US monetary policy.

Brent approached $82 per barrel after a nearly 4 per cent increase this week, while West Texas Intermediate hovered around $78.

US crude stocks expanded by 3.7 million barrels last week, contrasting with earlier forecasts of a decline. Additionally, government data indicated a rise in gasoline inventories.

Although US Consumer Price Index for All Urban Consumers (CPI-U) data eased inflation concerns for the second consecutive month, the Federal Reserve maintained interest rates and projected only one decrease this year, fostering a risk-on sentiment in broader markets on Wednesday. However, the Fed’s more hawkish stance has rekindled demand worries, accentuating bearish sentiments amid ample supplies.

Since early April, oil prices have been on a downward trajectory due to apprehensions about demand and abundant supply, coupled with diminished geopolitical tensions. According to a report by the International Energy Agency (IEA), global markets are poised for a significant surplus in the coming decade as the transition away from fossil fuels gains momentum.