The Brent crude oil benchmark hovered above $80 a barrel on Thursday, after demand concerns and a fading war-risk premium triggered a sell-off this week.

Brent crude futures were up $1.13, or about 1.4%, at $80.67 a barrel by 10:17 CDT (1617 GMT). U.S. West Texas Intermediate (WTI) crude futures gained $1.03, about 1.38%, to $76.36.

Both benchmarks dropped to their lowest since mid-July on Wednesday as concern over supply disruptions in the Middle East eased and expectations U.S. and Chinese demand will weaken intensified.

Thursday’s gains were signs the markets were re-orienting to fundamental supply-demand issues, Phil Flynn, analyst at Price Futures Group, said.

“I think we’re seeing the market saying the sell-off was overdone,” Flynn said.

Brent is nearly $20 a barrel lower than its September peak.

Data from China on Thursday showed policymakers struggling to control disinflation, casting doubt over the chances of a broad-based economic recovery in the world’s biggest commodity consumer.

Earlier in the week customs data showed that China’s total exports of goods and services contracted faster than expected.

Demand indicators also imply weakness in the United States.

U.S. crude oil inventories increased by 11.9 million barrels over the week to Nov. 3, sources said, citing American Petroleum Institute figures.

If confirmed, this would represent the biggest weekly build since February. The U.S. Energy Information Administration (EIA), however, has delayed release of weekly oil inventory data until Nov. 15 for a system upgrade.

Global markets, however, were upbeat on Thursday on the belief that major central banks have completed their rate hikes. High interest rates raise the cost of borrowing, dampening demand for everything, including oil.

Both OPEC and the International Energy Agency (IEA) are due to offer their view on the state of oil demand and supply fundamentals next week.

Since last month’s reports, higher output is expected from Venezuela after relaxation of U.S. sanctions, said Callum Macpherson, head of commodities at Investec, also highlighting a deterioration in the demand outlook.

“There is a danger the market could be in a surplus next year even if the Saudis do extend their cuts beyond the end of December,” he said.

OPEC is set to meet at the end of the month to discuss output policy for 2024.
Source: Reuters (Reporting by Natalie Grover in London, Andrew Hayley in Beijing and Jeslyn Lerh in Singapore Editing by David Goodman, Kirsten Donovan and Barbara Lewis)