Brent, the benchmark for two thirds of the world’s oil, was trading 0.28 per cent higher at $79.76 a barrel at 10.07am UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 0.27 per cent at $75.53 a barrel.
On Wednesday, Brent settled 2.54 per cent lower at $79.54 a barrel while WTI closed 2.64 per cent down at $75.33 a barrel.
“While the death toll in Gaza from Israeli air strikes continues to rise to unimaginable levels, the prospect of the conflict spreading to the oil-rich part of the Middle East has increasingly been put at near zero,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“Instead, the market focus continues to turn to the short-term demand outlook, which is showing signs of weakening.”
Both benchmarks have dropped by about 7 per cent over the past two days, despite the extension of voluntary output cuts of a combined 1.3 million barrels per day by Saudi Arabia and Russia until the end of the year.
US crude stocks, an indicator of a fuel demand, rose by 11.9 million barrels in the week that ended on November 3, according to the American Petroleum Institute.
The US Energy Information Administration has postponed the publication of their weekly oil stocks data, typically released on Wednesdays, until November 15.
Meanwhile, China's crude imports rose by about 14 per cent in October from a year earlier amid higher domestic demand, according to the General Administration of Customs.
However, overall exports from the world’s top crude importer and second-largest economy shrank by 6.4 per cent annually last month, the data showed.
“Trade data from China … further soured the mood. The focus is clearly shifting from undersupply to weak demand and central banks insisting that rates must remain high could further exacerbate that,” said Craig Erlam, a senior market analyst at Oanda.
However, China is expected to hit its annual gross domestic product growth target this year, the country's central bank governor said on Wednesday.
China’s GDP grew faster than expected in the third quarter, official data showed last month. Its economy expanded by 4.9 per cent, year on year, in the July-September period, compared with market expectations of a growth of 4.4 per cent.
The central bank will maintain reasonable credit growth, keep liquidity reasonably ample and “improve the efficiency of fund utilisation”, People's Bank of China Governor Pan Gongsheng said in a speech.
Beijing, which is aiming for a GDP growth rate of 5 per cent this year, has announced a string of stimulus measures in recent months after the country's post-Covid economic recovery lost momentum in the second quarter mainly due to a deepening property slump and weak consumer spending.
“Despite an upside surprise in imports data earlier in the week, Chinese demand has been lacklustre this year and this is weighing on price growth: Inflation was negative in July also and has hovered around zero in the intervening months,” Emirates NBD said in a research note.
The Chinese economy is projected to grow at 5.4 per cent this year, “reflecting a strong post-Covid rebound”, but growth is expected to slow in 2024 to 4.6 per cent amid continuing weakness in the property market and subdued external demand, the International Monetary Fund said this week.
These projections reflect upward revisions of 0.4 percentage points for both the years, compared with the IMF's October projections “due to a stronger-than-expected third quarter out-turn and recent policy announcements”, it said.
“With headwinds such as [an] ageing population, diminishing returns on investment and geoeconomic fragmentation likely to constrain medium-term growth prospects, broad-based and pro-market structural reforms aimed at boosting productivity, supporting rebalancing and decarbonisation would help support new engines of growth and foster a more balanced, inclusive and green growth,” said the fund's first deputy managing director, Gita Gopinath.
Meanwhile, the Opec+ group of oil producers is set to meet in Vienna on November 26 to set output targets for the first half of 2024.
Saudi Arabia and Russia are expected to extend their voluntary production cuts into the new year if the downward pressure on oil prices continues, MUFG said in a research note.
“Supply dynamics have played a key role in the leg lower in oil prices. Russian seaborne crude oil exports have grown in recent months and data shows that it is currently close to the highest seen in more than four months, suggesting that Russia may be shirking, somewhat, on its voluntary production cuts,” the Japanese lender said.