Shafaq News/ Oil prices rose onThursday, supported by optimism potential US interest rate cuts will boosteconomic activity and fuel consumption though concerns over slower globaldemand curbed gains.
Brent crude futures climbed 17cents, or 0.21%, to $79.93 a barrel by 0348 GMT, recovering some of theprevious day's losses. US West Texas Intermediate crude increased by 21 cents,or 0.27%, to $77.19 per barrel.
Both benchmarks fell more than 1% onWednesday after US crude inventories rose unexpectedly and on easing worriesabout a wider Middle East conflict.
US consumer prices rose moderatelyin July and the annual increase in inflation slowed to below 3% for the firsttime in nearly 3-1/2 years, reinforcing expectations the Federal Reserve willcut interest rates next month.
"We saw a correction in Asiatrade as the oil market was oversold on Wednesday," said Yuki Takashima,economist at Nomura Securities, adding that investors are betting the Fed couldstart cutting rates next month.
"Still, oil prices are expectedto stay under pressure going forward as concerns persist that global demand,especially in China, will be sluggish," Takashima said, predicting WTIwill head towards the $72 mark in early August.
Supporting prices further wereinvestor worries over Iran's potential response to the killing of the leader ofthe Palestinian Islamist group Hamas last month. Three senior Iranian officialshave said that only a ceasefire deal in Gaza would hold Iran back from directretaliation against Israel for the assassination.
"Geopolitical risk continues tohang over the oil market. It is still unclear how and if Iran will retaliateagainst Israel following the assassination of the political leader of Hamas onIranian soil," said ING analysts Warren Patterson and Ewa Manthey in aclient note.
"This uncertainty has led toincreased options trading activity with market participants wanting to protectthemselves from significant upside."
Separately, oil inventory gainsraised concerns of weaker demand, analysts at ANZ said in a client note. UScrude 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 firsttime since late June.
Earlier this week, the InternationalEnergy Agency trimmed its 2025 estimate for oil demand growth, citing theimpact of a weakened Chinese economy on consumption. That came after OPEC cutexpected demand for 2024 for similar reasons.
China's factory output growth slowedin July while refinery output fell for a fourth month, underscoring thecountry's spotty economic recovery.
(Reuters)