Oil prices rose slightly on Thursday, boosted by signals that the US Federal Reserve might start cutting interest rates and China announcing new support measures for its struggling real estate market.
Brent crude futures were up 5 cents at $80.60 a barrel at 06:51 GMT, and WTI crude oil futures were up 7 cents at $75.92 a barrel, after falling more than $2 a barrel in the previous session.
Oil prices were supported by expectations for a rate cut this year following Fed Chairman Jerome Powell’s speech on Wednesday.
In the statement, it was said that interest rates have peaked and will fall in the coming months as inflation continues to fall and sustainable employment and economic growth are expected.
Reinforcing the view that the central bank may start reducing interest rates as of June, the data showed that labor costs in the USA increased less than expected in the fourth quarter and the annual increase was at the lowest level in the last two years.
Low rates and economic growth support oil demand.
China, the world’s second-largest economy, has announced new real estate support measures amid concerns over the liquidation of developer Evergrande. The country ended last year with nearly the worst declines in new home prices in years.
Analysts say they expect China to remain the single largest contributor to global oil demand growth this year as well, and predict that oil demand in China will increase by 530,000 barrels per day (bpd) in 2024, following an increase of 1.2 million barrels per day last year.
Geopolitical turmoil aside, the view remains that 2024 will be a fundamentally healthy year for the oil market.
In the Middle East, concerns about attacks by Yemen-based Houthi forces on shipping in the Red Sea are inevitably increasing costs and disrupting global oil trade.
After the Houthi group announced that it would continue its attacks on US and British warships in the Red Sea, the energy market is waiting for the US reaction to the drone attack on American troops in Jordan.