Oil prices were set to snap a two-week losing streak today amid optimism about higher energy demand from top crude importer China and a weaker dollar.
Brent futures rose 20 cents (0.3%) to $75.87 a barrel by 0632 GMT, while US West Texas Intermediate (WTI) crude was 16 cents (0.2%) higher, at $70.78 a barrel. Both benchmarks surged about 3% during the prior session.
Data on Thursday showed China’s oil refinery throughput rose 15.4% in May from a year earlier, hitting its second-highest total on record. Chinese demand for oil is expected to keep climbing at an assured rate during the second half of the year, Kuwait Petroleum Corp’s CEO said.
In the United States, data released on Thursday showed retail sales unexpectedly rose in May, along with higher-than-expected jobless claims last week. The dollar fell to a five-week low versus a basket of other currencies.
A weaker dollar makes oil cheaper for holders of other currencies, which could boost demand.
Analysts also expect voluntary crude output cuts implemented in May by the Organization of the Petroleum Exporting Countries and its allies, and by Saudi Arabia in July, to support prices.
Still, a weak economic outlook looms over market sentiment, as China’s industrial output and retail sales growth in May missed forecasts.
“Crude prices are trying to find support as the global growth outlook remains vulnerable to further shocks from aggressive rate hiking campaigns,” Edward Moya, an analyst at OANDA said in a note.
The European Central Bank raised interest rates to a 22-year high as expected on Thursday. The US Federal Reserve this week signalled at least a half of a percentage point increase by year end.
Higher interest rates ultimately increase borrowing costs for consumers, which could slow economic growth and reduce oil demand.