Oil Prices Set Higher

Oil prices settled higher on Thursday after recovering from intraday losses, supported by stronger U.S. economic data that improved sentiment on crude demand, albeit with falling Chinese oil imports.

At 14:30 ET (18:30 GMT), West Texas Intermediate crude futures for September rose 0.7% to $82.11 a barrel, while Brent oil futures also gained 0.5% to $82.11 a barrel.

US GDP and PCE Inflation in Spotlight

U.S. GDP data revealed a 2.8% annualized growth in the second quarter, surpassing the 1.4% growth in the first quarter and expectations of 2%. This ongoing economic momentum precedes next week’s Federal Reserve meeting, where it’s anticipated that rates will remain unchanged. However, there is growing speculation about a potential rate cut in September.

Economic strength implies domestic oil demand may stay strong, especially as Chinese demand declines. Additionally, the recent U.S. crude inventory data indicated a larger-than-expected draw, reflecting seasonal demand.

Despite these encouraging signs, Citi notes that speculators are leaning bearish on oil markets ahead of the quarter-end unless unexpected weather or supply shocks occur.

China Demand Remains a Concern

The world’s largest oil importer, China, reported disappointing growth in Q2, with oil imports in June also plummeting. The lack of substantial stimulus measures from Beijing has further restrained sentiment.

An unexpected interest rate cut by the People’s Bank did little to bolster optimism. Furthermore, uncertainty surrounding the U.S. presidential race has raised doubts about future U.S.-China relations.

Additionally, reports from Europe indicate increasing pessimism in the eurozone’s largest economies. Surveys show the business climate deteriorated in France and Germany in July, raising concerns about the region’s sluggish recovery.

(Peter Nurse, Ambar Warrick contributed to this article.)