Oil hits 1-week high on demand hopes

Oil prices rose about 1% to a one-week high on Thursday after data from China and the US signalled that demand in the world’s two biggest crude-consuming nations could climb higher.

Brent futures rose 40 cents, or 0.5%, to $83.98 a barrel by 11:03 a.m. EDT (1503 GMT), while U.S. West Texas Intermediate crude rose 46 cents, or 0.6%, to $79.45.

That put both crude benchmarks on track for their highest closes since April 30.

In China, crude oil imports rose on the previous year in April, and exports and imports returned to growth last month, signalling an encouraging improvement in demand at home and overseas as Beijing navigates numerous challenges in an effort to shore up a shaky economy.

“The improved China trade balance data added to the upside momentum,” said Tina Teng, an independent market analyst.

In the U.S., the number new claims for unemployment benefits rose last week to the highest level in more than eight months, further evidence that the labor market was cooling.

Analysts projected that ebbing labor market momentum puts two interest rate cuts from the U.S. Federal Reserve this year back on the table.

Lower rates would reduce borrowing costs and could spur economic growth and demand for oil.

Meanwhile, the Bank of England took another step towards lowering interest rates, as a second official backed a cut and Governor Andrew Bailey said he was “optimistic that things are moving in the right direction”.

In the Middle East, meanwhile, Israeli forces massed tanks and opened fire close to built-up areas of Rafah on Thursday, residents said, after U.S. President Joe Biden vowed to withhold weapons from Israel if its forces launch a major invasion of the southern Gaza city.

In response, the leader of the Houthis in Yemen said the Iran-backed group, which has already disrupted the movement of ships through the Red Sea, would target ships of any company related to supplying or transporting goods to Israel regardless of their destination.