Oil Prices Rise After Positive U.S. Economic Data

By Nicole Jao
NEW YORK (Reuters) – Oil prices gained more than $1 a barrel on Thursday after U.S. economic data allayed fears of recession in the world’s biggest economy, though concerns about slower global demand limited the rally.

Brent crude futures settled up $1.28, or 1.6%, at $81.04 a barrel. U.S. West Texas Intermediate crude futures rose by $1.18, or 1.53%, to $78.16.

Data showed U.S. retail sales rose more than expected in July, while another report indicated 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 showed U.S. consumer prices rose moderately in July. This reinforced expectations that the Federal Reserve will cut interest rates next month, potentially boosting economic activity and oil consumption.

Oil prices also drew support from concerns about Iran’s 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, as Palestinian health authorities reported the death toll from the war surpassed 40,000, increasing pressure to end the conflict in the Palestinian enclave.

The Russia-Ukraine conflict also kept prices elevated, with Russia announcing enhancements to its border defenses and the deployment of additional forces after Ukraine’s significant recent attack on its territory.

Both main oil benchmarks had fallen over 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, contrary to estimates which predicted a 2.2 million barrel draw, marking a build for the first time since late June.

China’s factory output growth slowed in July, and refinery output fell for a fourth consecutive month, highlighting the country’s uneven economic recovery and limiting potential gains for crude markets on Thursday.