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Oil Prices Rise Over 1% on Positive U.S. Economic Data and Geopolitical Tensions

Oil prices rise on positive U.S. economic data and heightened geopolitical tensions in the Middle East. Credit: EconoTimes

Oil prices surged by over $1 per barrel on August 15, driven by positive U.S. economic data that eased recession fears. Brent crude rose 1.6% to $81.04 per barrel, while West Texas Intermediate increased 1.53% to $78.16, supported by geopolitical concerns.

Oil Prices Climb Over $1 per Barrel Amid Positive U.S. Economic Data and Middle East Tensions

On August 15, oil prices increased by over $1 per barrel due to U.S. economic data that alleviated concerns about a potential recession in the world's largest economy. However, the rally was constrained by concerns regarding a decrease in global demand.

Brent crude futures closed at $81.04 per barrel, representing a 1.6% increase of $1.28. The price of U.S. West Texas Intermediate crude futures increased by $1.18, or 1.53%, to $78.16, per Reuters.

According to data, retail sales in the United States increased more than anticipated in July. However, according to another report, the number of Americans filing for unemployment benefits increased slower than expected.

"The positive economic data serve as an indicator that we're heading towards a soft landing," said Bob Yawger, director of energy futures at Mizuho in New York.

According to data released by the Labor Department on August 14, consumer prices in the United States moderately increased in July. This bolstered anticipations that the Federal Reserve would reduce interest rates next month, potentially growing oil consumption and economic activity.

The oil prices were also bolstered by concerns regarding Iran's response to the assassination of the leader of the Palestinian militant group Hamas last month.

"Geopolitics and the risk of an expanding conflict in the Middle East are propping up prices, as the threats of retaliation continue to grow louder," said Tim Snyder, chief economist at Matador Economics.

The Palestinian health authorities reported that the death toll from the war had surpassed 40,000, and pressure to end the conflict in the Palestinian enclave was increasing. As a result, a new round of Gaza armistice talks was underway in the Qatari capital DOHA.

Russia-Ukraine Conflict and Rising U.S. Crude Inventories Keep Oil Prices Volatile Despite Global Uncertainty

Additionally, the Russia-Ukraine conflict maintained prices at an elevated level. In the wake of Ukraine's most significant assault on its sovereign territory since World War Two, Russia announced on August 15 that it would enhance border defenses, enhance command and control, and deploy additional forces.

The unexpected increase in U.S. crude inventories on August 14 resulted in a more than 1% decline in both primary oil benchmarks.

For the first time since late June, U.S. crude oil stockpiles increased by 1.4 million barrels in the week ending August 9, surpassing projections of a 2.2-million-barrel draw.

The country's economic recovery is characterized by a patchy nature, as evidenced by factory output growth in China weakened in July and refinery output declining for a fourth consecutive month. This has also restricted the potential for crude markets to advance on August 15.

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