Oil rises 1% to hit 1-week high on rising demand optimism in China, US; Brent nears $84/bbl

Oil prices rose nearly 1% to a one-week high on Thursday after data from China and the United States indicated that demand in the world’s two biggest crude-consuming countries could rise further.

Brent futures were up 40 cents, or 0.5%, at $83.98 a barrel by 11:03 AM EDT (1503 GMT), while U.S. West Texas Intermediate crude was up 46 cents, or 0.6%, at $79.45.

That puts both crude benchmarks on track for their highest closes since April 30.

In China, crude oil imports rose from a year earlier in April, and exports and imports returned to growth last month, signaling an encouraging improvement in demand at home and abroad as Beijing navigates numerous challenges in trying to prop up a faltering economy.

“Advanced China’s trade balance data added to the upside momentum,” said independent market analyst Tina Teng.

In the U.S., the number of new claims for unemployment benefits hit the highest level in more than eight months last week, further evidence that the labor market is cooling.

Analysts have speculated that the slowdown in labor market momentum is back on the table for two interest rate cuts from the US Federal Reserve this year.

Lower rates will reduce borrowing costs and encourage economic growth and oil demand.

Meanwhile, the Bank of England took another step towards cutting 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”.

In the Middle East, meanwhile, Israeli forces shelled and opened fire near the built-up area of ​​Rafah on Thursday, residents said, after US President Joe Biden promised to withhold weapons from Israel if his forces launched a major offensive in the southern Gaza city.

In response, the leader of Yemen’s Houthis said that the Iran-backed group, which has already disrupted shipping through the Red Sea, would target any company’s ships related to the delivery or transport of goods to Israel, regardless of their destination.

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Published: 09 May 2024, 10:28 PM IST

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