Oil rises on Middle East worries, future cuts to borrowing costs

Oil prices rose in early Asian trade on Thursday, extending gains from the previous session following a bigger-than-expected weekly withdrawal from U.S. crude storage and signaling from the U.S. Federal Reserve that it would start lowering borrowing costs in 2024.

Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil. The news also sent the dollar falling, which makes oil less expensive for foreign purchasers.

Brent futures rose 46 cents, or 0.6 per cent, to settle at $74.72 a barrel by 0007 GMT. U.S. West Texas Intermediate (WTI) crude rose 48 cents, or 0.7 per cent, to settle at $69.95.

The market rose last session on worries about the security of Middle East oil supplies after a tanker attack in the Red Sea.

A tanker in the Red Sea off Yemen's coast was fired on by gunmen in a speedboat and targeted with missiles, the latest incident to threaten the shipping lane after Yemeni Houthi forces warned ships not to travel to Israel.

The U.S. Energy Information Administration (EIA) said energy firms pulled a bigger than expected 4.3 million barrels of crude from stockpiles during the week ended Dec. 8 as imports fell.

In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC)blamed the latest crude price slide on "exaggerated concerns" about oil demand growth.

Brent futures have dropped about 10 per cent since OPEC+ announced a new round of production cuts on Nov. 30. OPEC+ includes OPEC and allies like Russia.