Oil prices rebounded marginally in early Asia trade on Thursday, after plunging the previous session, but the gains were offset by the dollar’s recovery, which dampened confidence about data showing a major decline in U.S. oil stocks over the past week.
Brent oil futures rose 0.12% to $83.30 a barrel, while West Texas Intermediate crude futures rose 0.10% to $79.56 a barrel by 10.58 A.M. Bangkok time.After gaining steadily for five weeks, both contracts were trading about 2% lower this week.
Oil traders took some profits off the table in response to increased risk aversion following Fitch’s downgrading of the U.S. credit rating. The dollar gained momentum on Wednesday as a stronger-than-expected private payrolls figure indicated labor market growth ahead of Friday’s nonfarm payrolls data.
The U.S. economy’s resilience raised bets that the Federal Reserve will have plenty of room to keep rising interest rates, which weakened most dollar-priced commodities.
In the week ending on July 28, official statistics showed that U.S. crude stockpiles dropped by almost 17 million barrels, significantly more than the predicted decline of 1.4 million barrels.
The decrease was the largest ever recorded going all the way back to 1982, and it pointed to a significant tightening of oil markets as a result of severe reductions in output.