By Rowena Edwards
LONDON (Reuters) -Oil prices rose on Thursday as the dollar weakened and data showed a jump in refinery runs in top crude importer China, though a weak economic backdrop capped gains.
Brent crude futures were up $1.16, or 1.58%, to $74.36 a barrel at 1341 GMT.
U.S. West Texas Intermediate (WTI) crude rose $1.10, or 1.61%, to $69.37 a barrel.
Both benchmarks fell 1.5% on Wednesday.
The market saw support as above-forecast U.S. jobless claims weighed on the U.S. dollar index. A weaker dollar makes oil cheaper for holders of other currencies which could boost demand.
Data on Thursday also showed China’s oil refinery throughput in May rising 15.4% from a year earlier, hitting its second highest total on record.
Chinese demand for oil is seen continuing to rise at an assured rate during the second half of the year, Kuwait Petroleum Corporation’s (KPC) chief executive said on Thursday.
But a weak economic outlook weighed, as China’s industrial output and retail sales growth in May missed forecasts.
Also capping price gains were fears that higher interest rates would slow the U.S. and European economies and reduce oil demand.
The European Central Bank raised interest rates for the eighth successive time to a 22-year high as expected on Thursday. It signalled further policy tightening, as it battles high inflation.
“The outlook for economic growth and inflation remains highly uncertain,” ECB President Christine Lagarde said on Thursday.
On Wednesday the U.S. Federal Reserve kept interest rates unchanged but signalled at least a half of a percentage point increase to borrowing costs by the end of this year.
Meanwhile, the Bank of England is set to make its monetary policy decision on June 22, with UK interest rates expected to rise above those in the United States this year.
Analysts expect oil prices to see support later in the year as voluntary cuts by OPEC+ countries implemented in May, and from Saudi Arabia in July, coincide with robust demand.
UBS expects a supply deficit of around 1.5 million barrels per day (bpd) in June and more than 2 million bpd in July.
“Once these deficits become visible in on-land oil inventories, we expect oil prices to trend higher,” the bank said in a note on Thursday.
(Reporting by Rowena Edwards in LondonAdditional reporting by Jeslyn Lerh in Singapore and Arathy Somasekhar in Houston; editing by Emelia Sithole-Matarise, Jason Neely and Susan Fenton)
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