Oil rises on risk of broadening Middle East conflict

Oil prices rose during Asian trade on Thursday, extending gains from the previous session, after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil, Reuters reported.

Global benchmark Brent crude futures rose 46 cents, or 0.6%, to $81.30 a barrel by 0355 GMT, while U.S. West Texas Intermediate crude futures gained 55 cents, or 0.7%, to $78.46 a barrel.

The most active contracts on both benchmarks jumped about 4% in the previous session.

Also pushing up prices was a set of data releases from the U.S., the world’s biggest oil consumer, and a weaker dollar.

Robust export demand pushed U.S. crude oil stockpiles lower by 3.4 million barrels in the week ended July 26 to 433 million barrels, data from the U.S. Energy Information Administration (EIA) showed on Wednesday.

Meanwhile, the U.S. dollar index extended losses on Thursday from the previous session, after the Federal Reserve held interest rates but left the door open for a cut in September. A weaker dollar can boost oil demand from investors holding other currencies.

In the long term, investors are not confident of Chinese demand, said Phillip Nova analyst Priyanka Sachdeva, adding that this concern will continue to limit the upside in oil prices.

Official data from China on Wednesday showed that manufacturing activity slipped to a five-month low in July as factories grappled with falling new orders and low prices.

A private sector survey on Thursday also showed China’s manufacturing activity in July shrank for the first time in nine months as new orders declined.