Crude oil prices were set for a weekly increase earlier today as optimism returned to the oil market following the release of a couple of better-than-expected reports on the U.S. economy.
One of these was the retail sales report for July, which showed a 1% increase versus expectations of a 0.3% improvement, Reuters reported. The increase was all the more significant because it followed a monthly dip of 0.2% for June.
The other report was the weekly jobless claims tally, which came in lower than expected, with new claims down by 7,000 for the week to August 9 from the previous one.
"US economic data released this week has helped to temper fears of a sharp slowdown in the US economy," FGE told Reuters.
The latest data will also likely reinforce hopes that the Fed will soon begin cutting interest rates, which is seen as a major potential oil demand booster. On the other hand, the Fed has signaled repeatedly it would not rush into any interest rate cuts, meaning that these hopes may yet get betrayed.
The strength of oil benchmarks is notable because of the abundance of bearish factors weighing on the commodity. Signs of weaker Chinese oil demand and two global demand revisions that came out this week, from OPEC and the International Energy Agency, are the key bearish factors.
Meanwhile, in the Middle East the danger of an escalation remains while Israel continues to bomb Gaza and Iran continues biding its time. Israel this week began negotiations with international mediators on a possible ceasefire but what good that would do remains unclear since Hamas is boycotting the talks.
"Geopolitics and the risk of an expanding conflict in the Middle East are propping up prices, as the threats of retaliation continue to grow louder," Matador Economics chief economist Tim Snyder told Reuters on Thursday.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More