© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
By Arathy Somasekhar and Andrew Hayley
BEIJING (Reuters) -Oil prices rose on Thursday, reversing earlier losses, as a potential pause in U.S. interest rate hikes and the debt ceiling bill passing a crucial vote renewed optimism about further fuel demand growth in the world’s biggest oil consumer.
futures for August rose 32 cents, or 0.44% to $72.92 a barrel by 0518 GMT, while U.S. West Texas Intermediate crude (WTI) rose 25 cents, or 0.37%, to $68.34 a barrel.
U.S. Federal Reserve officials on Wednesday pointed towards a potential rate hike “skip” in June that reversed market expectations of an imminent hike that could slow economic growth and weaken oil demand.
Additionally, the U.S. House of Representative’s passage of a bill suspending the U.S. government’s $31.4 trillion debt ceiling improved the chances of averting a disastrous government default.
Both benchmarks had fallen steeply in the previous sessions, with Brent down 5.6% and WTI dropping 6.3% as of the close on Wednesday, from last Friday.
“Oil markets may have been oversold in the last two trading days due to the sluggish Chinese data and debt ceiling concerns. Sentiment rebounded amid the debt bill’s passage in the House, and (the) Fed’s rate hike pause signal also offered a rebounding opportunity,” said Tina Teng, a markets analyst at CMC Markets in Auckland.
Demand indications from China, the world’s biggest oil importer, are somewhat mixed this week.
Official government data on Wednesday reported factory activity contracted in May to the lowest in five months, while service sector activity expanded at the slowest pace in four months.
However, the Caixin/S&P Global China manufacturing purchasing managers’ index (PMI) on Thursday showed a rise to 50.9 in May from 49.5 in April, tempering concerns about Chinese industrial demand.
Prices are also struggling to overcome bearish supply side factors.
{{8849|U.S. crcrude oil inventories rose by about 5.2 million barrels last week, according to market sources citing American Petroleum Institute (API) figures on Wednesday.
Gasoline inventories also posted a build of about 1.9 million barrels last week, while distillate fuel inventories gained by 1.8 million barrels, according to the API data.
Market participants are awaiting government data on U.S. crude stocks due later on Thursday. The data was delayed by a day because of a U.S. holiday earlier this week. [EIA/S]
Investors were also watching the upcoming June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, after mixed signals so far on whether further cuts are likely.
Analysts at HSBC and Goldman Sachs (NYSE:) have said they do not expect OPEC+ to announce further cuts at this meeting.
This story originally appeared on Investing