Oil rose on Thursday after a two-day decline as a weaker U.S. dollar, strike-disrupted fuel supply in France and a drop in U.S. crude inventories offset fears over the economic impact of rising interest rates. TotalEnergies was unable to make deliveries from its French refineries on Thursday because of continued strike action a day after data showing an unexpected decline in U.S. crude inventories last week. “The halt in deliveries from TotalEnergies’ French refineries due to the nationwide strikes together with the slight weakness in the dollar might attract some shorts to cover part of their positions,” Tamas Varga of oil broker PVM told Reuters.
“After the Fed’s chair warning of higher interest rates, however, any attempt to push oil prices higher is likely to be capped.” Brent crude rose by 64 cents, or 0.8%, to $83.30 a barrel, while U.S. West Texas Intermediate crude added 85 cents, or 1.1%, to $77.51. Both benchmarks fell by between 4% and 5% over the previous two days.
Offering some support, the dollar dipped on Thursday after data showed that U.S. jobless claims rose more than expected last week, raising hopes that a softening labour market will reduce the likelihood of the Federal Reserve reaccelerating the pace of its rate hikes. A weaker dollar makes oil cheaper for buyers holding other currencies and tends to support risk appetite among investors. Earlier in the week, U.S. Federal Reserve Chair Jerome Powell’s comments on the likelihood that interest rates will need to be raised more than previously expected in response to recent strong data had pushed prices lower. Crude has also drawn support from expectations of rising Chinese demand. While China’s crude oil imports in the first two months of 2023 fell 1.3% year on year, analysts pointed to accelerating imports in February as a sign that fuel demand was rebounding after Beijing scrapped COVID-19 controls.
