By Peter Nurse
Investing.com -- Oil prices edged higher Thursday, struggling for direction as concerns about ample supply and a potential economic slowdown in the U.S. and Europe, complete with optimism that crude demand in China, the second largest economy in the world, will grow.
By 09:50 ET (14:50 GMT), U.S. crude futures traded 0.5% higher at $78.07 a barrel, while the Brent contract rose 0.4% to $84.61 a barrel.
Data released Wednesday showed that U.S. crude inventories rose by 1.2 million barrels last week to just over 480 million barrels, their highest level since May 2021.
This was the tenth consecutive week of crude stock builds in the United States, and raised questions about demand destruction in the largest consumer of crude in the world.
Initial jobless claims edged down Thursday to 190,000 from 192,000 the previous week, pointing to a healthy labor market and providing more room for the U.S. Federal Reserve to continue hiking interest rates, potentially hitting economic activity further down the line.
Adding to the uncertainty is the difficulty in assessing the net impact of disruption to Russian exports of crude and products due to G7 sanctions.
While there’s plenty of data to suggest that Russian oil is still finding its way to world markets – Indian refiners processed a record high amount of crude in February and their Turkish counterparts are also running at record rates – Platts reported that Russia’s seaborne exports of products fell by one-fifth last month as a new EU ban came into force.
At the same time, data from the Energy Information Administration showed that U.S. crude oil exports increased to a record high of 5.6 million barrels a day over the last week, boosted by healthy demand from Europe.
On the plus side, confidence is growing in the likelihood of a strong economic rebound in top crude importer China after the Asian giant ended its severe mobility restrictions that were put in place to tackle the spread of COVID.
Data released earlier this week showed that manufacturing activity in China grew at the fastest pace in more than a decade last month, pointing to the need for more crude as factories start operating at full pace.