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Oil prices were ticking slightly upward on Thursday following U.S. economic data showing a 1.7% increase in Q2 2022 nonfarm business sector labor productivity.
The U.S. Bureau of Labor Statistics (BLS) on Wednesday said output had also increased 3.1%, with hours worked also up 1.4%.
Additionally, the number of Americans who applied for unemployment benefits at the end of February fell slightly.
The 1.7% increase in labor productivity for Q4 is 1.3% lower than expectations. It also shows that productivity is still lagging.
Annual average productivity decreased 1.7% from 2021 to 2022, the “largest annual decline in the measure since 1974”, according to the BLS.
Senior market analyst at OANDA Edward Moya said in a market update on Thursday that “this China economic led oil-price rally is fighting against the tentative return of the king dollar trade, as the U.S. labor market still shows no signs of weakening”.
"Normally, impressive U.S. labor data is good news for the argument for improving short-term crude demand drivers, but that is not the case right now," Moya said, warning about a “much more aggressive” Federal Reserve.
Nonetheless, Thursday’s figures lend additional support to signs of improving demand in the U.S.
This, combined with improving Chinese economic data from earlier in the week is driving oil prices up slightly.
At 11:36 a.m. EST Thursday, Brent crude oil was trading up 0.74% at $84.93 per barrel, while WTI was trading up 0.99% at $78.46 per barrel.
For the time being, continued inflation fears are keeping demand optimism from driving oil prices up too high, though Goldman Sachs on Wednesday reiterated its prediction of $100 oil in the future, saying that an oil price spike is expected in the next 12-18 months as rising demand creates a tight supply situation.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com