SINGAPORE, May 16 Reuters Oil prices extended gains from the previous session on Thursday on signs of stronger demand in the U.S., where data showed slower inflation than markets expected, bolstering the argument for an interest rate cut that could drive greater consumption.

Brent futures rose 32 cents, or 0.4, to 83.07 a barrel at 0620 GMT, while U.S. West Texas Intermediate crude WTI gained 31 cents, or 0.4, to 78.94.

A more tamed read for U.S. April inflation and a far weakerthanexpected read in U.S. retail sales seem to offer room for the Fed to consider earlier rate cuts, with market expectations leaning more firmly for policy easing to kickstart in September this year, said IG market strategist Yeap Jun Rong.

The largerthanexpected drawdown in U.S. crude inventories for last week also offered some calm, while geopolitical tensions continue to rock on in the Middle East.

U.S. consumer prices rose less than expected in April in a boost to financial market expectations for a September rate cut by the Federal Reserve, which could temper dollar strength and make oil more affordable for holders of other currencies.

Elsewhere, U.S. crude oil, gasoline and distillate inventories fell, reflecting a rise in both refining activity and fuel demand, showed data from the Energy Information Administration EIA.

Crude inventories fell 2.5 million barrels to 457 million barrels in the week ended May 10, the EIA said, versus the 543,000 barrel consensus analyst forecast in a…