Oil prices extended their gains on Thursday following positive U.S. economic data that alleviated concerns about a potential recession in the world’s largest economy. Data revealed that U.S. retail sales increased more than anticipated in July, alongside a smaller-than-expected rise in unemployment claims.
Brent crude futures rose by 92 cents (1.2%) to $80.68 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 95 cents (1.2%) to $77.93. Naeem Aslam from Zaye Capital Markets noted that the retail sales and unemployment claims data provided a wealth of positive news for the markets.
Despite these gains, both benchmarks had fallen over 1% on Wednesday due to an unexpected rise in U.S. crude inventories. A report indicating that U.S. consumer prices rose moderately in July further supported market expectations for a potential interest rate cut by the Federal Reserve next month.
Geopolitical tensions also contributed to market dynamics, particularly regarding Iran’s potential response to recent events involving the assassination of Hamas leaders. Analysts from ING highlighted ongoing geopolitical risks, noting uncertainty about how Iran might retaliate against Israel.
However, rising oil inventories raised concerns about weaker demand, as U.S. crude stockpiles increased by 1.4 million barrels for the week ending August 9, contrary to expectations of a 2.2 million-barrel draw. Additionally, China’s factory output growth slowed in July, and refinery output fell for the fourth consecutive month, reflecting challenges in the country’s economic recovery.