By Scott DiSavino
NEW YORK (Reuters) -Oil prices edged up to a one-week high on Thursday on data from China and the U.S. signaling demand in the world's two biggest crude-consuming nations could climb.
Brent futures rose 30 cents, or 0.4%, to settle at $83.88 a barrel, while U.S. West Texas Intermediate crude rose 27 cents, or 0.3%, to settle at $79.26.
That was the highest close for both crude benchmarks since April 30.
Limiting those price gains was U.S. energy data showing gasoline and diesel demand last week was the weakest since the 2020 coronavirus pandemic.
"Oil prices traded in a very tight range. There's not a lot of oil news out there. The geopolitical news from the Middle East is in the background and it's unclear," Phil Flynn, an analyst at Price Futures Group, said of the small changes in crude prices.
In China meanwhile, crude oil imports rose on the previous year in April and exports and imports returned to growth last month, indicating an increase in demand at home and overseas as Beijing moves to shore up a shaky economy.
"The improved China trade balance data added to the upside momentum," said Tina Teng, an independent market analyst.
In the U.S., the number of new claims for unemployment benefits rose last week to the highest in more than eight months, further evidence that the labor market was cooling.
Analysts projected that ebbing labor market momentum puts two interest rate cuts from the U.S. Federal Reserve this year back on the table.
Lower rates would reduce borrowing costs and could spur economic growth and demand for oil.
The Bank of England took another step toward lowering interest rates as a second official backed a cut and Governor Andrew Bailey said he was "optimistic that things are moving in the right direction".
MIDDLE EAST TURMOIL
Israeli tanks and warplanes bombarded areas of Rafah, Palestinian residents said, after President Joe Biden said the U.S. would withhold weapons from Israel if its forces mount a major invasion of the southern Gaza city.
"If the Biden boycott spurs the Israelis to sign a ceasefire deal with Hamas, then WTI crude oil could potentially squeeze another $10 (a barrel) of geopolitical risk premium out of the market," Bob Yawger, director of energy futures at Mizuho, said in a note.
"However, if Iran becomes emboldened by the U.S. stance and jumps back into the fray after keeping (a) low profile for weeks, then the market could rally back to multi-month highs," Yawger added.
In response to Israel's latest operation, the leader of the Houthis in Yemen said the Iran-backed group, which has already disrupted shipping in the Red Sea, would target ships of any company related to supplying or transporting goods to Israel.
(Reporting by Scott DiSavino in New York, Paul Carsten in London, Deep Vakil in Bengaluru, Laila Kearney in New York and Emily Chow in Singapore; Editing by Mark Potter, Kirsten Donovan, Marguerita Choy and Jan Harvey)
