NEW YORK: Oil prices held near a one-week high on Thursday as data from China and the U.S. that signalled demand in the world’s two biggest crude-consuming nations could climb offset weak current U.S. distillates and gasoline demand.
Brent futures rose 15 cents, or 0.2%, to $83.73 a barrel by 1:28 p.m. EDT (1728 GMT), while U.S. West Texas Intermediate (WTI) crude rose 16 cents, or 0.2%, to $79.15.
That put both crude benchmarks on track for their highest closes since April 30.
U.S. gasoline and diesel demand were at their weakest seasonal level since the 2020 coronavirus pandemic, according to weekly data from the U.S. Energy Information Administration.
In China meanwhile, crude oil imports rose on the previousyear in April and exports and imports returned to growth lastmonth, signalling improvement in demand at home and overseas as Beijing moves to shore up a shaky economy.
“The improved China trade balance data added to the upsidemomentum,” said Tina Teng, an independent market analyst.
In the U.S., the number of new claims for unemploymentbenefits rose last week to the highest in more than eightmonths, further evidence that the labor market was cooling.
Analysts projected that ebbing labor market momentum putstwo interest rate cuts from the U.S. Federal Reserve this yearback on the table.
Lower rates would reduce borrowing costs and could spur economic growth and demand for oil.
The Bank of England took another step towards lowering interest rates as a second official backed a cut and Governor Andrew Bailey said he was “optimistic that things are moving in the right direction”.
Middle east turmoil
Israeli tanks and warplanes bombarded areas of Rafah, Palestinian residents said, after President Joe Biden said the U.S. would withhold weapons from Israel if its forces mount a major invasion of the southern Gaza city.
“If the Biden boycott spurs the Israelis to sign a ceasefiredeal with Hamas, then WTI crude oil could potentially squeezeanother $10 (a barrel) of geopolitical risk premium out of themarket,” Bob Yawger, director of energy futures at Mizuho, saidin a note.
“However, if Iran becomes emboldened by the U.S. stance andjumps back into the fray after keeping (a) low profile forweeks, then the market could rally back to multi-month highs,”Yawger added.
In response to Israel’s latest operation, the leader of the Houthis in Yemen said the Iran-backed group, which has already disrupted shipping in the Red Sea, would target ships of any company related to supplying or transporting goods to Israel.