Fuel prices were also weighed down by concerns over the escalating conflict in the Middle East, with fears of supply disruptions in the major oil-producing region.
Brent crude futures were up 78 cents, or 0.9%, at $85.85 a barrel by 1349 GMT, having earlier touched a level of $85.89, not seen since May 1.
U.S. West Texas Intermediate (WTI) futures for July, which expire on Thursday, rose 70 cents, or 0.9%, to $82.27.
WTI was not settled on Wednesday due to a US public holiday, keeping trading mostly slow. The more active August contract was up 60 cents at $81.31.
The number of Americans filing new claims for unemployment benefits fell last week.
Labor market momentum is tied to the overall economy as the Federal Reserve tries to tame inflation. With that pressure now easing, rate cuts are on the table this year.
That could boost oil prices, which have been dragged down this year by weak global demand. A cut in US rates would make borrowing cheaper in the world’s largest economy, as rising production would fuel appetite for oil.
Oil prices are also likely to remain supported due to rising geopolitical risk premiums due to conflict in the Middle East, ActiveTrades analyst Ricardo Evangelista said.
Israeli forces attacked areas in the central Gaza Strip overnight, while tanks deepened their advance into Rafah in the south.
However, expectations of inventories build currently appear to be overshadowed by fears of escalating geopolitical tensions, said Priyanka Sachdeva, senior market analyst at Philip Nova.
Investors are awaiting the release of US oil inventory data on Thursday, a day later than usual due to Wednesday’s Juneteenth holiday.
An industry report released on Tuesday showed US crude stocks rose by 2.264 million barrels in the week ended June 14, while gasoline inventories fell, market sources said, citing data from the American Petroleum Institute.
A summer surge in oil demand, refinery runs and weather risks added to extended production cuts by the OPEC+ producer group mean “the oil balance should tighten and inventories should begin to draw during the summer months”, JPMorgan Commodities analysts wrote. has written
Investors also digested the Bank of England’s decision to leave its key interest rate unchanged at a 16-year high of 5.25% ahead of Britain’s national election on July 4.
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