By Nicole Jao
(Reuters) -Oil prices edged higher on Thursday after strong U.S. economic data fueled expectations for higher crude demand, but gains were limited by concerns about lower oil imports from China.
September futures rose 66 cents, or 0.81%, to $82.37 a barrel. U.S. West Texas Intermediate crude rose 69 cents, or 0.89%, to $78.28 in September.
Commerce Department data showed Thursday that the U.S. economy grew faster than expected in the second quarter while inflation eased, raising expectations that the Federal Reserve would cut interest rates in September. Lower interest rates are expected to stimulate economic activity, which could increase oil consumption.
“The US GDP data implied that the economy is moving at a decent pace,” said Bob Yawger, director of energy futures at Mizuho in New York. “It’s an indication that we’re going to have a ‘soft landing,’” he said, referring to a scenario in which inflation is tamed without causing a painful recession or a big rise in unemployment.
In China, oil imports and refineries fell lower this year than in 2023, reflecting weaker fuel demand amid sluggish economic growth, government data showed.
“While Chinese economic data remains disappointing, we are starting to see a larger decline in oil inventories, indicating that supply growth is lagging behind demand growth,” said UBS analyst Giovanni Staunovo.
Earlier on Thursday, the Chinese central bank unexpectedly cut interest rates in an attempt to support the weakening economy.
Both benchmarks fell by more than $1 per barrel earlier in the session.
In Canada, hundreds of wildfires are raging in the western provinces of British Columbia and Alberta, including in the area of the Fort McMurray oil sands hub. Some rain is expected to fall in the area later this week, which will ease supply concerns. The hub produces 3.3 million barrels of crude oil per day.
Elsewhere, efforts to broker a ceasefire to end the war in Gaza between Israel and the militant group Hamas have accelerated in the past month. A breakthrough could erode ongoing threats to supply, sending prices lower.
“Ongoing, and according to some sources, conciliatory developments in the Gaza peace talks are making it increasingly difficult for oil prices to sustain periodic rallies,” John Evans, an analyst at oil broker PVM, said in a note.
However, Israeli forces advanced deeper into some towns on the eastern side of Khan Younis in southern Gaza on Thursday, hours after Israeli Prime Minister Benjamin Netanyahu told US lawmakers he was actively involved in bringing hostages home.
