Oil prices settled higher Thursday, as signs that global rates cuts are underway boosted optimism on the global economy easing demand worries somewhat following an unexpected build in U.S. inventories a day earlier.

At 14:30 ET (18:30 GMT), the West Texas Intermediate crude futuresrose 1.9% to $75.50 a barrel andBrent oil futuresrose 0.1% to $78.44 a barrel.

Global rate-cut optimism rises following weak U.S. jobs data, ECB cut

The ECB become the second major central bank to begin rate cuts on Thursday following the Bank of Canada earlier this, sparking hopes that others including the Federal Reserve could soon follow suit. 

Weak U.S. labor data on Thursday fueled bets that the Federal Reserve will begin cutting rates by as soon as September.

The number of Americans filing for first-time unemployment benefitsrose by 229,000 last week, more than the expected 220,000.

Hefty weekly losses on OPEC+, US inventories 

Crude benchmarks are still on course to post weekly losses after the Organization of Petroleum Exporting Countries and allies (OPEC+) signaled it could begin scaling back production cuts this year.

Additionally, government inventory data showed on Wednesday that U.S. oil inventories grew by 1.2 million barrels in the week to May 31, compared to expectations for a draw of 2.1 mb.

Distillates grew by a bigger-than-expected 3.2 mb, while gasoline inventories grew slightly less than expected at 2.1 mb.

The overall builds in stockpiles raised some concerns over cooling demand in the world’s biggest fuel consumer, even as the travel-heavy summer season began.

OPEC+ could walk back phasing out supply cuts - Roth

Sustained weakness in oil prices could see the OPEC+ walk back on its plans to begin phasing out production cuts this year, Roth MKM analysts said in a note.

The cartel said at its latest meeting that it intends to begin scaling back 2.2 million barrels per day of production cuts from October 2024 to September 2025. This triggered a sharp decline in oil prices.

But weakness in the oil prices may see the OPEC+ postpone, or even put off any plans to increase production.