Oil prices edged up on Thursday, supported by signals from the U.S. Federal Reserve on a possible start to rate cuts and as China unveiled new support measures for its embattled property market.
Brent crude oil, the international benchmark for Nigerian oil, inched up 5 cents to $80.60 a barrel and U.S. West Texas Intermediate crude oil gained 7 cents to $75.92 at 06:51 am, after falling by more than $2 a barrel in the previous session.
Oil prices are likely supported by expectations for rate cuts this year following a speech by Federal Reserve Chair Jerome Powell on Wednesday, CMC Markets analyst Tina Teng said.
Powell said on Wednesday that interest rates had peaked and would move lower in coming months, with inflation continuing to fall and an expectation of sustained job and economic growth.
Reinforcing views that the central bank could start cutting interest rates by June, data showed U.S. labour costs rose less than expected in the fourth quarter and the annual increase was the smallest in two years.
Lower rates and economic growth are supportive for oil demand.
China, the world’s second biggest economy, unveiled new property support measures amid concerns about the fallout from the liquidation of developer Evergrande (3333.HK), opens new tab and as the country ended last year with the worst declines in new home prices in nearly nine years.
Analysts at JPMorgan said they expected China to remain the single largest contributor to global oil demand growth this year, forecasting oil demand there would grow by 530,000 barrels per day (bpd) in 2024, following a 1.2 million bpd surge last year.
“Geopolitics aside, our view remains that 2024 will be fundamentally a healthy year for the oil market and we recommended using December’s sell-off as a buying opportunity,” JPMorgan said in a client note.
In the Middle East, worries about attacks by Yemen-based Houthi forces on shipping in the Red Sea are now driving up costs and disrupting global oil trading.
“The energy market remains on edge as it waits for a U.S. response to the drone attack on American troops in Jordan,” ANZ Research said in a note, after the Houthi group said it would keep up attacks on U.S. and British warships in the Red Sea in what it called acts of self defence.
