Oil prices settled higher on Thursday after strong U.S. economic data stoked expectations for higher crude demand, but the gains were limited by concerns about lower oil imports from China.
Brent crude futures for September settled up 66 cents, or 0.81%, to $82.37 a barrel. U.S. West Texas Intermediate crude for September gained 69 cents, or 0.89%, to $78.28.
U.S. Commerce Department data on Thursday showed the U.S. economy grew faster than expected in the second quarter while inflation eased, boosting expectations the Federal Reserve would lower interest rates in September. Lower interest rates are expected to stir economic activity, which could increase oil consumption.
“The U.S. GDP data implied the economy is humming along in a pretty nice rate,” said Bob Yawger, director of energy futures at Mizuho in New York. “It’s an indication that we’re going to have a ‘soft landing,’” he said, referring to a scenario in which inflation is tamed without triggering a painful recession or large rise in unemployment.
In China, oil imports and refinery runs this year have trended lower than in 2023 on weaker fuel demand amid sluggish economic growth, government data showed.
“While Chinese economic data remains disappointing, we are starting to see larger oil inventory draws, which suggests supply growth lags demand growth,” UBS analyst Giovanni Staunovo said.
Earlier on Thursday, China’s central bank unexpectedly cut interest rates in a move to shore up its weakening economy.
Both crude oil benchmarks fell by more than $1 per barrel earlier in the session.
In Canada, hundreds of wildfires are burning in the western provinces of British Columbia and Alberta, including in the area of oil sands hub Fort McMurray. The area is forecast to receive some rain later this week, allaying supply worries. The hub produces 3.3 million barrels per day of crude.
Elsewhere, efforts to reach a ceasefire deal to end the war in Gaza between Israel and militant group Hamas have gained momentum over the past month. A breakthrough could erode lingering threats to supply, sending prices lower.
“With continued, and according to some sources, conciliatory developments in Gaza peace talks, oil prices are finding it increasingly hard to hang on to intermittent rallies,” John Evans, an analyst at oil broker PVM, said in a note.
Israeli forces, however, advanced deeper into some towns on the eastern side of Khan Younis in southern Gaza on Thursday, hours after Israeli Prime Minister Benjamin Netanyahu told U.S. lawmakers he was actively engaged in bringing hostages home.