Oil prices increased on Thursday, recovering from two days of significant declines, as attention remained on the ongoing conflict in the Middle East and potential stimulus measures in China, the largest oil importer.
The rise in crude prices was tempered by a strong dollar, as traders positioned themselves ahead of key U.S. consumer inflation data set to be released later in the day. Additionally, data indicating a larger-than-expected increase in U.S. inventories exerted further pressure.
Brent crude futures for December delivery climbed 0.4 percent to $76.89 a barrel, while West Texas Intermediate crude futures also gained 0.4 percent, reaching $72.86 a barrel by 21:00 ET (01:00 GMT). Both contracts had fallen approximately 5 percent over the previous two sessions.
Ongoing Middle East tensions
Concerns about potential disruptions to oil supplies due to an escalating conflict in the Middle East have been a significant driver of oil prices in the past week. Traders remain cautious about the possibility of an intensification of hostilities, particularly if oil facilities are targeted.
Focus on Chinese stimulus
Market participants are looking for more indications of stimulus measures from China, following a series of monetary policies that largely disappointed. Chinese officials have announced a press conference this Saturday to discuss plans for additional fiscal stimulus. As the world’s largest oil importer, China is facing challenges in bolstering its economic growth and has been cautious in implementing more aggressive stimulus.
Read more: Oil prices rebound as market reacts to U.S. inventory surge, Middle East tensions ease
Strong dollar affects oil markets ahead of U.S. CPI
The strength of the dollar has weighed on oil prices this week, with traders awaiting insights on interest rates from the upcoming consumer price index inflation data. This reading comes amid increasing skepticism regarding the U.S. Federal Reserve’s ability to continue cutting interest rates rapidly, with market expectations now indicating a 25 basis point reduction as the Fed’s likely next step.
In the U.S., attention is also on the potential effects of Hurricane Milton, which made landfall in Florida as a category-3 storm. Fortunately, the storm has largely avoided major oil infrastructure in the Gulf of Mexico.
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