Investing.com-- Oil prices rose slightly Thursday, boosted by the release of solid U.S. labor data, providing hope that the world's largest economy was not heading for a hard landing.
AT 09:15 ET (13:15 GMT), Brent oil futures traded flat at $78.35 a barrel, while West Texas Intermediate crude futures rose 0.2% to $75.36 a barrel.
Data released earlier Thursday showed the number of Americans filing new applications for unemployment benefits came in at 233,000 for the week ended Aug. 3.
This was below the 241,000 expected, and a reduction from the revised 250,000 the prior week, which was an 11-month high.
Both contracts were nursing sharp losses in recent sessions amid concerns that a potential U.S. recession will batter oil demand.
JPMorgan has raised the odds of a U.S. recession by the end of this year to 35% from 25%, citing easing labor market pressures.
China oil imports drop in July as growth concerns mount
The crude market has showed weakness earlier in the session after data showed China imported around 10 million barrels of oil in July, down 12% from June and 3% lower than the same period last year, government data showed on Wednesday.
The drop in imports came amid weaker fuel demand and lower refining margins.
Rhe weak import data was also preceded by a string of soft economic readings from China, which added to concerns over slowing growth in the world’s biggest oil importer.
Concerns over demand saw traders attach little risk premium to oil prices despite the prospect of a bigger war in the Middle East, as tensions rose between Israel and Iran.
US inventories shrink more than expected, but products grow
U.S. oil inventories shrank 3.7 million barrels in the week to August 2, dropping for a sixth straight month and also falling more than expectations for a draw of 1.6 million barrels.
The reading sparked some hopes of tighter U.S. markets, especially as demand picked up over the past two months in the travel-heavy summer season.
But builds in gasoline and distillate inventories indicated that fuel demand may now be cooling after a strong summer.
Energy Information Administration data also showed U.S. oil production hit a record high of 13.4 million barrels per day last week.
The EIA also forecast that global oil demand will grow at a slower pace than initially expected.
Citi maintains longer term bearish view
Analysts at Citi Research in a note dated Wednesday have indicated a potential short-term rebound in the Brent contract to the low-to-mid-$80s per barrel.
However, the investment bank maintains its bearish outlook for the longer term, forecasting an average price of $60/bbl for Brent in 2025.
The bank cited several factors supporting this view, including a global economic slowdown and the increasing adoption of electric vehicles in China are expected to dampen oil demand growth; OPEC+ countries possessing significant spare capacity, which could be deployed to offset potential supply disruptions and prevent price spikes; and robust oil production from non-OPEC countries is anticipated to further weigh on prices.
(Ambar Warrick contributed to this article.)