Oil prices rose on Thursday, supported by optimism that potential US interest rate cuts will boost economic activity and fuel consumption though concerns over slower global demand curbed gains.
Brent crude futures rose 19 cents, or 0.24%, to $79.95 a barrel by 0625 GMT, recovering some of the previous day’s losses.
US West Texas Intermediate crude futures increased by 23 cents, or 0.3%, to $77.21 per barrel.
Both benchmarks fell more than 1% on Wednesday after US crude inventories rose unexpectedly and on easing worries about a wider Middle East conflict.
US consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time in nearly 3-1/2 years, reinforcing expectations the Federal Reserve will cut interest rates next month.
“We saw a correction in Asia trade as the oil market was oversold on Wednesday,” said Yuki Takashima, economist at Nomura Securities, adding that investors are betting the Fed could start cutting rates next month.
Investor worries over Iran’s potential response to the killing of the leader of the Palestinian group Hamas last month supported prices.
Three senior Iranian officials have said that only a ceasefire deal in Gaza would hold Iran back from direct retaliation against Israel for the assassination.
“Geopolitical risk continues to hang over the oil market. It is still unclear how and if Iran will retaliate against Israel … This uncertainty has led to increased options trading activity with market participants wanting to protect themselves from significant upside,” ING analysts said in a client note.
However, oil inventory gains raised concerns of weaker demand, analysts at ANZ said in a client note.
Global oil demand growth slowing: IEA
US 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.
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