Oil rises nearly 2% on upbeat US economic data, geopolitical tension
By Nicole Jao
NEW YORK (Reuters) - Oil prices rose more than $1 on Thursday after U.S. economic data allayed fears of an imminent recession in the world's biggest economy, though concerns over slower global demand curbed the rally.
Brent crude futures were up $1.43, or 1.79%, at $81.19 a barrel by 1:30 p.m. EDT (1730 GMT). U.S. West Texas Intermediate crude futures rose by $1.41, or 1.83%, to $78.38.
Data showed U.S. retail sales rose more than expected in July, while another report showed a smaller than expected increase in the number of Americans filing for unemployment benefits.
"The positive economic data serve as an indicator that we're heading towards a soft landing," said Bob Yawger, director of energy futures at Mizuho in New York.
Data from the Labor Department on Wednesday showing U.S. consumer prices rose moderately in July reinforced expectations that the Federal Reserve will cut interest rates next month. Lower interest rates are expected to stir economic activity, which could increase oil consumption.
Oil prices were additionally supported by worries over Iran's potential response to the killing of the leader of the Palestinian militant group Hamas last month.
"Geopolitics and the risk of an expanding conflict in the Middle East are propping up prices, as the threats of retaliation continue to grow louder," said Tim Snyder, chief economist at Matador Economics.
A new round of Gaza ceasefire talks was underway in the Qatari capital Doha on Thursday afternoon, as Palestinian health authorities said the death toll from the war surpassed 40,000 and pressure to end war in the Palestinian enclave mounted.
The Russia-Ukraine conflict also kept prices elevated. Russia said on Thursday it would beef up border defences, improve command and control and send in additional forces, days after Ukraine made the biggest attack on its sovereign territory since World War Two.
Both main oil benchmarks had fallen more than 1% on Wednesday after U.S. crude inventories increased unexpectedly.
U.S. crude oil stockpiles rose by 1.4 million barrels in the week ended Aug. 9, compared with estimates for a 2.2 million barrel draw, building for the first time since late June. [EIA/S]
China's factory output growth slowed in July, while refinery output fell for a fourth month, underscoring the country's spotty economic recovery and limiting the upside for crude markets on Thursday.
Source: Investing.com
