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Oil prices settled higher Fri, snapping a 4-week losing streak as easing fears of a global economic slowdown helped improve sentiment on demand.
At 14:30 ET (18:30 GMT), Brent oil futures rose 0.6% to USD79.66 a barrel, while WTI crude futures climbed 0.9% to USD76.84 a barrel.
The number of oil rigs rose by 3 to 485 from a week ago, Baker Hughes reported Fri.
The uptick in rig counts pointing to increased drilling activity comes even as the US Department of Energy cut its forecast on domestic crude oil production to 300,000 barrels for 2024 from a prior estimate of 320,000 bpd this year.
Better-than-expected U.S. jobless claims data on Thu boosted sentiment, raising hope the world's largest economy could avoid a recession.
Data earlier Fri showed that Chinese consumer price index inflation grew more than expected in Jul, while a decline in producer price index inflation was slightly less than expected.
The data highlighted some improving trends in the world's biggest oil importer, especially after Beijing enacted a slew of interest rate cuts through Jul.
But inflation still remained largely languid, with a sustained decline in factory prices suggesting that a deflationary trend was still in play.
China’s oil imports also shrank in Jul, data showed earlier this week. Fears of slowing demand in the country have been a major pain point for oil markets.
Initial gains in crude were fueled largely by bargain buying, after a rout on Mon put prices at seven-month lows.
But signs of sustained draws in U.S. inventories spurred hopes that demand in the country remained underpinned by the travel-heavy summer season, even as the pace of draws appeared to be slowing.
Traders were also seen attaching a greater risk premium to oil prices, after Ukraine mounted one of its biggest attacks on Russia since the war began in early-2022.
Sustained tensions in the Middle East, amid fears of retaliation by Iran and Hamas against Israel, also kept some risk elements in oil.
The killing last week of senior members of militant groups Hamas and Hezbollah had raised the possibility of retaliatory strikes by Iran against Israel, stoking concerns over oil supply from the world's largest producing region.
Yet, despite this week's gains, global oil demand growth needs to accelerate in coming months or the market will struggle to absorb an increase in oil supply that OPEC+ is planning to make from Oct.
Oil demand growth in the first seven months of the year from top consumers the United States and China had failed to meet some expectations even before the recently renewed fears of a U.S. recession.
If the economy slows further, oil demand growth will likely slow with it. That will mean OPEC+ would either have to delay plans to pump more oil or accept lower prices for higher supply.
"Oil demand definitely has a downside risk," said Neil Atkinson, an independent analyst who previously worked at the International Energy Agency, citing concern about Chinese and U.S. economies.
"It's very difficult to see how prices can rise significantly if demand is slower than we thought" he said, adding that he expected OPEC+ to hit pause on its output increase.
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