Oil holds near one-week high on rising demand hopes after China, US data
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OIL prices held near a one-week high on Thursday as data from China and the US that signalled demand in the world’s two biggest crude-consuming nations could climb offset weak current US distillates and petrol demand.
Brent futures rose 15 cents, or 0.2 per cent, to US$83.73 a barrel by 1.28 pm EDT (1728 GMT), while US West Texas Intermediate (WTI) crude rose 16 cents, or 0.2 per cent, to US$79.15.
That put both crude benchmarks on track for their highest closes since April 30.
US petrol and diesel demand were at their weakest seasonal level since the 2020 coronavirus pandemic, according to weekly data from the US Energy Information Administration.
In China meanwhile, crude oil imports rose on the previous year in April and exports and imports returned to growth last month, 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 upside momentum,” said Tina Teng, an independent market analyst.
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In the US, the number of new claims for unemployment benefits rose last week to the highest in more than eight months, further evidence that the labor market was cooling.
Analysts projected that ebbing labor market momentum puts two interest rate cuts from the US Federal Reserve this year back 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 US 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 ceasefire deal with Hamas, then WTI crude oil could potentially squeeze another US$10 (a barrel) of geopolitical risk premium out of the market,” Bob Yawger, director of energy futures at Mizuho, said in a note.
“However, if Iran becomes emboldened by the US stance and jumps back into the fray after keeping (a) low profile for weeks, 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. REUTERS
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