Brent gains on strong US economic data

The front-month ICE Brent contract gained $0.11/bbl on the day, to trade at $80.25/bbl at 09.00 GMT.PHOTO: An oil pump jack. Getty Images

Upward pressure:

Fresh economic data from the world’s largest oil consumer has supported demand growth expectations and boosted Brent’s price gains today. The US retail sales data released yesterday exceeded analysts' expectations, according to Reuters. Retail sales in the country rose by 1% in July, indicating higher consumer spending and easing concerns about an economic slowdown that could dent oil demand.

This news has put upward pressure on Brent’s price, which is already reacting to recent developments in the Middle East, according to market analysts. “[Brent] crude oil reversed recent losses as positive economic data and supply side concerns boosted investor sentiment,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.

Iran and its regional proxies in Lebanon and Yemen remain “poised” to retaliate to the recent killings of two Hamas and Hezbollah leaders, Hynes added.

Downward pressure:

Some downward pressure on Brent crude is arising from renewed ceasefire talks in the Israel-Hamas conflict, even as troops from Tel Aviv continued its ground assault in the Gaza Strip.

“Officials from the US and Israel began high-stakes negotiations for a Gaza ceasefire in the Qatari capital of Doha on Thursday,” VANDA Insights’ founder and analyst Vandana Hari said.

The talks have been reportedly boycotted by Hamas, according to Reuters.

Concerns about Chinese oil demand have prevented some of Brent's price gains. Chinese refinery activity remained sluggish in July due to low demand. The country’s apparent oil demand fell 8% year-on-year in July, Hynes remarked.

By Aparupa Mazumder

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