Investing.com– Oil prices rose in Asian trade on Friday and were set to clock a strong week after positive cues on demand in top importer China, while an Israel-Hamas ceasefire appeared increasingly unlikely.
A softer dollar– amid more signs of a cooling U.S. labor market- also aided crude prices, as did recent data showing a drawdown in overall U.S. oil inventories.
Brent oil futures expiring in July rose 0.5% to $84.33 a barrel, while West Texas Intermediate crude futures rose 0.6% to $79.26 a barrel by 21:21 ET (01:21 GMT).
Oil heads for weekly gains amid some positive cues
Both contracts were set to gain about 2% each this week after clocking steep losses in the prior week.
A major point of support for oil was stronger-than-expected overall import data from China, the world’s biggest oil importer. Signs of strong domestic demand pushed up hopes that oil demand in the country will remain steady.
This was seen with China’s oil imports as well. While imports fell from the prior month, they remained close to levels seen last year.
Other positive demand cues also aided oil. U.S. crude inventories fell as expected in the past week, with refining and fuel demand set to increase tracking higher travel demand during summer.
But on the other hand, data showed that U.S. gasoline and diesel demand last week was at its weakest levels since the 2020 COVID-19 pandemic.
Still, a softer dollar benefited crude, as weak readings on the U.S. labor market continued to trickle in. The readings helped reinforce bets that the Federal Reserve will begin cutting interest rates by September this year.
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Israel-Hamas ceasefire appears unlikely, tensions high
Israel continued its assault on the South Gaza city of Rafah, even as Hamas said the assault largely undermined ceasefire talks.
The attacks continued even as the U.S. said it will suspend weapon shipments to Israel over the Rafah strikes.
The Rafah strikes pointed to sustained geopolitical unrest, as Israel and Hamas failed to reach a ceasefire deal. This in turn kept some elements of a risk premium alive in crude markets, given that geopolitical unrest in the Middle East could potentially disrupt supplies from the crude-rich region.
