By Adedapo Adesanya
Oil prices settled higher on Thursday for the third consecutive session, with support from US jobs data which eased demand concerns while war in the Middle East helped prices recover from an eight-month low on Monday.
Brent crude jumped by 83 cents or 1.06 per cent to $79.16 per barrel and the US West Texas Intermediate (WTI) crude increased by 96 cents or 1.28 per cent to $76.19 per barrel.
According to the latest statistics, the number of Americans making new claims for unemployment benefits declined more than predicted last week, suggesting that anxieties about the labour market are overstated.
Market analysts noted that the latest US data on jobless claims indicates that the world’s largest economy is still growing, reducing some of the oil demand concerns.
This development allayed worries of a looming recession in the US—the world’s largest oil consumer.
Investors were also digesting a 3.7 million barrel drop in US crude inventories last week, as reported by the Energy Information Administration on Wednesday. The drop far exceeded analysts’ expectations and marked a sixth straight weekly decline to six-month lows.
Geopolitical uncertainty, exacerbated by the death of a top Hezbollah leader in Beirut, and a force majeure on Libya’s biggest oil well, Sharara, have overshadowed China’s story of poor oil demand.
The killing of senior members of militant groups Hamas and Hezbollah last week had raised the possibility of retaliatory strikes by Iran against Israel, stoking concerns over oil supply from the world’s largest-producing region.
Iran-aligned Houthi militants have launched attacks on international shipping near Yemen since last November in solidarity with Palestinians in the war between Israel and Hamas.
Libya’s National Oil Corporation (NOC) announced a force majeure at its Sharara oilfield on Tuesday, adding that the company had gradually reduced the field’s production because of protests. The news of Shararah’s force majeure seems to have contributed to the price hike, although whether that will be sustained has yet to be seen.
Oil analysts predicted that a large interruption in oil supply would be required to keep commodities prices rising.
Analysts at Citi said there was a possibility of a bounce in prices to the low-to-mid $80s for Brent.
“Upside risks in the market remain, from still-tight balances through August, heightened geopolitical risks across North Africa and the Middle East, the possibility of weather-related disruptions through hurricane season, and light managed money positioning,” the bank said on Thursday.