By Scott DiSavino
NEW YORK (Reuters) -Oil prices rose over 2% to a one-week high on Thursday as the U.S. dollar weakened and data showed a jump in refinery runs in top crude importer China.
Brent futures rose $1.76, or 2.4%, to $74.96 a barrel by 11:21 a.m. EDT (1521 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.70, or 2.5%, to $69.97.
Brent was headed for its highest close since June 8 and WTI since June 9.
A bigger increase in U.S. gasoline futures boosted the gasoline crack spread, a measure of refining profit margins, to its highest since July 2022.
The oil market saw support from U.S. reports showing retail sales unexpectedly rose in May and higher than expected jobless claims last week cut the dollar <.DXY> to a one-month low versus a basket of other currencies.
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 rose 15.4% in May from a year earlier, hitting its second highest total on record.
Chinese demand for oil is expected to keep climbing at an assured rate during the second half of the year, said Kuwait Petroleum Corp’s chief executive.
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 (ECB) raised interest rates to a 22-year high as expected on Thursday. It signaled further policy tightening, as it battles high inflation.
“The outlook for economic growth and inflation remains highly uncertain,” said ECB President Christine Lagarde.
On Wednesday the U.S. Federal Reserve kept interest rates unchanged but signaled at least a half of a percentage point increase by year end.
Analysts expect voluntary crude output cuts implemented in May by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies, and by Saudi Arabia in July, to support prices at a time of strong 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.
In other supply news, a Turkish energy delegation will meet Iraqi oil officials in Baghdad on June 19 to discuss the resumption of Iraq’s northern oil exports, Iraqi deputy oil minister for upstream affairs, Basim Mohammed, told Reuters.
Turkey halted Iraq’s 450,000 bpd of northern exports through the Iraq-Turkey pipeline on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC).
(Additional reporting by Rowena Edwards in London, Jeslyn Lerh in Singapore and Arathy Somasekhar in Houston; editing by Emelia Sithole-Matarise, Jason Neely, Susan Fenton and David Gregorio)