Oil rises nearly 2% on upbeat US economic data, geopolitical tensions

Brent crude futures up $1.51 or 1.89%

By Reuters

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Published: Thu 15 Aug 2024, 8:30 PM

Oil prices rose more than $1 on Thursday after US 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 $1.51, or 1.89 per cent, at $81.27 a barrel by 1557 GMT. US West Texas Intermediate crude futures rose by $1.44, or 1.87 per cent, to $78.42.

Data showed US 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 US retail sales data, along with the US unemployment claims number, provided a plethora of positive news for the markets,” said Naeem Aslam of Zaye Capital Markets.

Data showing US consumer prices rose moderately in July reinforced expectations that the Federal Reserve will cut interest rates next month, also lending support to the market.

Oil prices were additionally supported by worries over Iran’s potential response to the killing of Hamas leader Ismail Haniyeh last month. A new round of Gaza ceasefire talks was underway in the Qatari capital Doha on Thursday afternoon.

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.

“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.

Both main oil benchmarks had fallen more than 1 per cent on Wednesday after US crude inventories increased unexpectedly.

US crude oil stockpiles rose by 1.4 million barrels in the week ended August 9, compared with estimates for a 2.2 million barrel draw, building for the first time since late June.

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.