West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.60 on Thursday. The WTI price trades with mild gains after the American Petroleum Institute (API) weekly report showed US crude stockpiles continued to shrink.

A fall in US crude inventories last week provides some support to the WTI. The API weekly report showed crude oil stockpiles in the United States for the week ending December 27 declined by 1.442 million barrels, compared to a fall of 3.2 million barrels in the previous week. The market consensus estimated that stocks would decrease by 3.0 million barrels. Furthermore, the escalating geopolitical tensions in the Middle East and ongoing Russia-Ukraine conflicts could boost the WTI price in the near term. 

On the other hand, the expectation that the US Federal Reserve (Fed) would slow the pace of the interest rate cuts in 2025 due to stubbornly high inflation might cap the upside for the black gold. The Fed officials indicated that it probably would only lower twice more in 2025. This, in turn, lifts the Greenback and exerts some selling pressure on the USD-denominated commodity price as it makes oil more expensive in other countries, which can reduce demand.

The recent data released on Thursday showed that China’s factory activity slowed its pace of expansion and came in weaker than expected in December. This reading raised concerns over a slowing economic recovery and weak demand in the world's second-largest economy, which might drag the WTI price lower.

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