Oil nudges higher on US inflation and jobs data

LONDON :Oil prices edged higher on Thursday after U.S. markets opened to economic data showing a softening of the country's labour market while fresh inflation numbers suggested that price pressures could be easing.

Gains were kept in check by the likelihood that the U.S. Federal Reserve will keep interest rates on hold for a few more months and by increases to U.S. crude and fuel inventories.

Brent crude futures rose 23 cents, or 0.3 per cent, to $82.38 a barrel by 1339 GMT. West Texas Intermediate (WTI) U.S. crude futures rose 16 cents, or 0.2 per cent, to $78.66. Both benchmarks had gained nearly 1 per cent in the previous session.

The Labor Department said the producer price index (PPI) for final demand dropped 0.2 per cent last month, below the 0.1 per cent increase forecast from economists polled by Reuters, while separate data showed weekly initial jobless claims climbed above estimates to a 10-month high.

Yet the Fed held interest rates steady on Wednesday and pushed out the start of policy easing to as late as December.

"In the Fed's view this is the price that needs to be paid to achieve a soft landing (for the economy) and avoid recession beyond doubt," said PVM Oil analyst Tamas Varga.

Higher borrowing costs tend to dampen economic growth and can, by extension, limit oil demand.

In a press conference after the U.S. central bank's two-day policy meeting, Fed Chair Jerome Powell said that inflation had fallen without a major blow to the economy, adding that there was no reason to think that cannot continue.

On the supply side, U.S. crude stockpiles rose more than expected last week, driven largely by a jump in imports, while fuel inventories also increased more than expected, data from the Energy Information Administration showed on Wednesday.

Also weighing on prices was a bearish report by the International Energy Agency, which warned of excess supply in the near future.

Traders are also watching continuing talks over a potential ceasefire in Gaza, which could ease fears of oil supply disruptions in the region.

In the latest attack on shipping, Iran-allied Houthi militants on Wednesday took responsibility for an attack by small craft and missiles that left a Greek-owned coal carrier in need of rescue near Yemen's Red Sea port of Hodeidah.

The militant group has attacked international shipping in the Red Sea region since November in solidarity with the Palestinians in the war between Israel and Hamas.

U.S. Secretary of State Antony Blinken said that Hamas had proposed numerous changes to a U.S.-backed proposal for a ceasefire, adding that mediators were determined to close gaps in the negotiations.