Oil prices edged up 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. The improvement in oil prices will earn Nigeria more revenue and foreign exchange. This will enhance the foreign exchange market and increase the nation’s external reserves. Brent crude futures for September rose 30 cents to $82.01 a barrel while U.S. West Texas Intermediate crude for September gained 54 cents to $78.13. 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.” 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,” said UBS analyst Giovanni Staunovo. 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 the Middle East, 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 and send 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,” said John Evans, analyst at oil broker PVM in a note. However, keeping investors on their toes, Israeli forces 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. 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.
