Oil prices posted a weekly gain amid geopolitical tensions in the Middle East and an improving outlook for the US economy.
Brent, the benchmark for two thirds of the world’s oil, rose 0.63 per cent to end at $79.66 per barrel while West Texas Intermediate, the gauge that tracks US crude, settled up 0.85 per cent to $756.84 a barrel.
Crude futures have been volatile during the week due to a production cut at Libya’s largest oilfield and as traders brace for potential Iranian retaliation against Israel.
Earlier in the week, oil prices fell sharply following weaker-than-expected job figures in the US, which sparked concerns about a potential recession in the world's largest economy.
Analysts have said worries about the US economy are mostly exaggerated and that oil demand remains robust.
The number of new unemployment benefit applications in the US dropped more than expected last week, easing concerns about a deteriorating labour market and allaying fears of a hard recession.
Initial claims for state unemployment benefits decreased by 17,000 to a seasonally adjusted 233,000 for the week ending August 3, the largest decline in nearly a year, the Labour Department said on Thursday.
Meanwhile, fuel demand in the US has remained strong.
US crude inventories fell by 3.7 million barrels in the week that ended on August 2, according to the US Energy Information Administration.
Analysts polled by Reuters were expecting a drop of 700,000 barrels.
Total petroleum stocks increased by 1.3 million barrels last week, while distillate fuel inventories rose by 900,000 barrels, the EIA data showed.
Goldman Sachs expects Brent prices to maintain a $75 per barrel floor despite near-term macroeconomic concerns.
In a research note this week, the investment bank said limited recession worries, strong oil demand in the West and India, and low speculative positioning are likely to support oil prices in the short term.
On the supply side, prices received support from reduced production at Libya’s Sharara oilfield.
On Tuesday, Libya's National Oil Corporation said it would gradually reduce production at the oilfield, citing protests in the region.
Sharara, responsible for a quarter of Libya’s output, had been producing 270,000 bpd before the partial shutdown.
In the Middle East, the likelihood of a full-scale regional conflict increased last week following the assassinations of Hamas leader Ismail Haniyeh in Tehran and senior Hezbollah military commander Fouad Shukr in Beirut.
Israel has agreed to resume Gaza ceasefire talks on August 15 after calls from US, Qatari and Egyptian mediators, Prime Minister Benjamin Netanyahu's office said on Thursday.
"Following the proposal of the United States and mediators, Israel will, on August 15, send a delegation of negotiators to the agreed place to conclude the details of implementing a deal," it said.
