Oil Prices Settle Higher Despite Weekly Losses

Oil prices saw an increase on Thursday, buoyed by an unexpected draw in U.S. inventories, though they remained on track for significant weekly losses due to weak U.S. labor data heightening global demand concerns.

At 14:30 ET (18:30 GMT), Brent oil futures rose 1.5% to $77.22 a barrel, while West Texas Intermediate (WTI) crude futures gained 1.5% to $73.01 a barrel.

So far this week, Brent has declined over 4%, and WTI crude is down 6%.

US Inventories Shrink More Than Expected

Official data released on Wednesday showed that oil inventories dropped by 4.6 million barrels for the week ending August 16, significantly more than the anticipated 2 million barrels.

Additionally, substantial draws in both distillates and gasoline stockpiles indicated robust fuel demand in the U.S., the world’s largest economy, even as the busy summer travel season comes to a close.

Weak Economic Data Limit Gains

The U.S. Labor Department reported an increase in jobless claims last week and a larger-than-expected decline in manufacturing activity. While concerns regarding economic weakness have been somewhat alleviated by expectations of Federal Reserve rate cuts next month, worries about growth may adversely affect demand in the world’s largest fuel-consuming nation.

Traders are uncertain about the demand outlook for the remainder of the year, particularly after weak economic indicators from China raised fears about declining demand amid a slowdown in the world’s biggest oil importer.

*(Ambar Warrick contributed to this article.)