Brent crude futures jumped $1.80, or 2.29%, to $80.43 a barrel ahead of expiry on Wednesday, while the more active October contract was $1.85 higher at $79.92
Oil prices jumped on Wednesday, rebounding from 7-week lows as tensions escalated in the Middle East and overshadowed concerns about weak China demand.
Brent crude futures jumped $1.80, or 2.29%, to $80.43 a barrel by 1038 GMT ahead of expiry on Wednesday, while the more active October contract was $1.85 higher at $79.92.
U.S. WTI crude futures were up $2, or 2.68%, to $76.73 a barrel.
A 0.4% decline in the U.S. dollar index also lent support to prices. A weaker dollar can boost demand for oil by making greenback-denominated commodities such as oil cheaper for holders of other currencies.
A day earlier Brent and WTI both declined nearly 1.4%, closing at their lowest levels in seven weeks.
Overnight developments and elevated geopolitical risk merely provide temporary reprieve for oil benchmarks. Unless oil and gas infrastructure is hit, the latest spike is unlikely to last, said Gaurav Sharma, an independent oil analyst in London.
Still, Brent and West Texas Intermediate are on track in July to post their biggest monthly loss since October 2023 on concerns about China’s demand outlook and expectations OPEC+ will stick to their current deal on production and start unwinding some output cuts from October.
Top ministers from OPEC+, will hold an online joint ministerial monitoring committee meeting (JMMC) on Thursday.
Slowing fuel demand in China, the world’s biggest crude oil importer, is also weighing on oil markets.
China’s manufacturing activity in July declined for a third month, an official factory survey showed on Wednesday.
Concerns about Chinese demand remain higher as today’s PMIs dropped, with the manufacturing sector further contracting. This indicates that any further gains due to intensifying tensions in the Middle East may remain limited and short lived, according to Charalampos Pissouros, senior investment analyst at brokerage XM.