By Stephen Culp

NEW YORK (Reuters) -U.S. stocks were lifted by semiconductor shares on Wednesday, and the benchmark Treasury yield continued to climb to a more than one-month high amid cooling optimism over imminent interest rate cuts from the Federal Reserve.

Supply concerns arising from simmering geopolitical tensions helped boost oil prices.

All three major U.S. stock indexes were higher, and were on track for weekly gains.

The benchmark S&P 500 continued to hover within 1% of its all-time closing high.

A sunnier-than-expected consumer sentiment reading added to the list of solid economic data released this week, notably retail sales and jobless claims.

These robust indicators dampened expectations that the Fed would start cutting its key policy rate as soon as March, while also providing assurance that the U.S. economy was under no immediate threat of recession.

“(The Fed) has been pushing back against the market-embedded rate cut expectations, partly due to better economic data,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta.

“The assumption about the better economy is that all other things being equal puts upward pressure on inflation, then you have more work to do to make sure inflation comes down further and stays down,” Martin added. “It gives them room to keep rates higher for longer without sending the economy into a recession.”

At last glance, financial markets have priced in a 51.9% probability that the central bank will cut the fed funds target rate by 25 basis points in March, down from 76.9% a week ago, according to CME’s FedWatch tool.

Market participants will be increasingly focused on fourth quarter earnings next week as the reporting season shifts into high gear.

To date, just over 10% of the companies in the S&P 500 have reported results for the Oct-Dec period, 85% of which have beaten analyst expectations, according to LSEG I/B/E/S.

The Dow Jones Industrial Average rose 116.06 points, or 0.31%, to 37,584.67, the S&P 500 gained 16.72 points, or 0.35%, to 4,797.66 and the Nasdaq Composite added 76.09 points, or 0.51%, to 15,131.73.

European shares reversed earlier gains as dimming rate cut expectations put the benchmark STOXX 600 index on track for a weekly decline.

The pan-European STOXX 600 index lost 0.27% and MSCI’s gauge of stocks across the globe gained 0.42%.

Emerging market stocks rose 0.89%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.1% higher, while Japan’s Nikkei rose 1.40%.

U.S. 10-year Treasury yields continued to climb on the growing likelihood that the Fed will keep policy rates in restrictive territory for longer than many had anticipated.

Benchmark 10-year notes last fell 6/32 in price to yield 4.1668%, from 4.144% late on Thursday.

The 30-year bond last fell 2/32 in price to yield 4.3743%, from 4.372% late on Thursday.

The dollar was lower against a basket of world currencies, but remained on course for a weekly advance amid cooling rate cut optimism.

The dollar index fell 0.14%, with the euro up 0.06% to $1.0881.

The Japanese yen strengthened 0.03% versus the greenback at 148.13 per dollar, while sterling was last trading at $1.2677, down 0.22% on the day.

Crude prices rose and were headed for a weekly increase as supply concerns from mounting tensions in the middle east outbalanced worries over softening demand.

U.S. crude rose 0.34% to $74.33 per barrel and Brent was last at $79.44, up 0.43% on the day.

Gold prices inched higher but appeared set for its biggest weekly decline in six, as policy makers tempered early rate cut expectations.

Spot gold added 0.2% to $2,026.99 an ounce.

(Reporting by Huw Jones, additional reporting by Stella Qiu; Editing by Susan Fenton, Mark Potter and Chizu Nomiyama)

By Noel Randewich and Ankika Biswas

(Reuters) -U.S. stocks ended sharply up on Thursday, with the S&P 500 approaching record highs as AI optimism drove gains in Nvidia and other chipmakers.

U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) soared nearly 10% after the world’s largest contract semiconductor maker projected 2024 revenue growth of more than 20% on booming demand for high-end chips used in artificial-intelligence applications.

Heavyweight chipmaker Nvidia rose 1.9% to a record high, and it was the most-traded company on Wall Street, with almost $28 billion worth of shares exchanged. Rival Advanced Micro Devices rose 1.6% and also notched a record high.

Broadcom, Qualcomm and Marvell Technology gained more than 3% each. The Philadelphia SE semiconductor index rallied 3.4% and approached its December 2023 record high.

“AI has caused this industry to have a ‘rip your face off’ rally, and I don’t think it’s stopping anytime soon,” said Jake Dollarhide, CEO of Longbow Asset Management.

Apple jumped 3.3% after BofA Global Research upgraded the iPhone maker’s stock to “buy” from “neutral.” That helped the S&P 500 information technology index rise 2% and hit a record high.

The S&P 500 climbed 0.88% to end the session at 4,780.94 points. The benchmark is down just 0.3% from its record-high close in January 2022.

The Nasdaq gained 1.35% to 15,055.65 points, while the Dow Jones Industrial Average rose 0.54% to 37,468.61 points.

Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late-2022 low, suggesting solid job growth in January.

Wall Street has wavered in recent sessions as investors became less sure the Federal Reserve will begin cutting interest rates in March.

The S&P 500 lost ground on Tuesday and Wednesday following strong December retail sales data and after policymakers talked down expectations for an early start to rate cuts.

Traders now see a 56% chance for a 25-basis-point rate cut in March, compared with a chance above 80% a month ago, according to the CME Group’s FedWatch Tool.

Interest rate-sensitive sectors dipped, with the S&P 500 real estate index down 0.6% and utilities index losing 1.05%.

Atlanta Federal Reserve President Raphael Bostic said he was open to reducing rates sooner than he had anticipated if there is “convincing” evidence in coming months that inflation is falling faster than he expected. Bostic had previously said he expected it would be appropriate to cut rates in the second half of 2024.

Humana dropped 8% after the health insurer forecast fourth-quarter medical costs to be higher than previously expected. Peer UnitedHealth fell 1.6%.

KeyCorp dropped 4.6% after the lender posted a decline in fourth-quarter profit, while Birkenstock sank about 8% after missing quarterly profit expectations.

Spirit Airlines ended down more than 7% after news it is looking at options to refinance its debt and is not considering restructuring.

Advancing issues outnumbered falling ones within the S&P 500 by a two-to-one ratio.

The S&P 500 posted 30 new highs and seven new lows; the Nasdaq recorded 56 new highs and 180 new lows.

Volume on U.S. exchanges was relatively heavy, with 11.8 billion shares traded, compared with an average of 11.5 billion shares over the previous 20 sessions.

(Reporting by Noel Randewich in Oakland, CaliforniaAdditional reporting by Johann M Cherian and Ankika Biswas in BengaluruEditing by Shounak Dasgupta and Matthew Lewis)

By Noel Randewich and Ankika Biswas

(Reuters) -U.S. stocks ended sharply up on Thursday, with the S&P 500 approaching record highs as AI optimism drove gains in Nvidia and other chipmakers.

U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) soared nearly 10% after the world’s largest contract semiconductor maker projected 2024 revenue growth of more than 20% on booming demand for high-end chips used in artificial-intelligence applications.

Heavyweight chipmaker Nvidia rose 1.9% to a record high, and it was the most-traded company on Wall Street, with almost $28 billion worth of shares exchanged. Rival Advanced Micro Devices rose 1.6% and also notched a record high.

Broadcom, Qualcomm and Marvell Technology gained more than 3% each. The Philadelphia SE semiconductor index rallied 3.4% and approached its December 2023 record high.

“AI has caused this industry to have a ‘rip your face off’ rally, and I don’t think it’s stopping anytime soon,” said Jake Dollarhide, CEO of Longbow Asset Management.

Apple jumped 3.3% after BofA Global Research upgraded the iPhone maker’s stock to “buy” from “neutral.” That helped the S&P 500 information technology index rise 2% and hit a record high.

The S&P 500 climbed 0.88% to end the session at 4,780.94 points. The benchmark is down just 0.3% from its record-high close in January 2022.

The Nasdaq gained 1.35% to 15,055.65 points, while the Dow Jones Industrial Average rose 0.54% to 37,468.61 points.

Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late-2022 low, suggesting solid job growth in January.

Wall Street has wavered in recent sessions as investors became less sure the Federal Reserve will begin cutting interest rates in March.

The S&P 500 lost ground on Tuesday and Wednesday following strong December retail sales data and after policymakers talked down expectations for an early start to rate cuts.

Traders now see a 56% chance for a 25-basis-point rate cut in March, compared with a chance above 80% a month ago, according to the CME Group’s FedWatch Tool.

Interest rate-sensitive sectors dipped, with the S&P 500 real estate index down 0.6% and utilities index losing 1.05%.

Atlanta Federal Reserve President Raphael Bostic said he was open to reducing rates sooner than he had anticipated if there is “convincing” evidence in coming months that inflation is falling faster than he expected. Bostic had previously said he expected it would be appropriate to cut rates in the second half of 2024.

Humana dropped 8% after the health insurer forecast fourth-quarter medical costs to be higher than previously expected. Peer UnitedHealth fell 1.6%.

KeyCorp dropped 4.6% after the lender posted a decline in fourth-quarter profit, while Birkenstock sank about 8% after missing quarterly profit expectations.

Spirit Airlines ended down more than 7% after news it is looking at options to refinance its debt and is not considering restructuring.

Advancing issues outnumbered falling ones within the S&P 500 by a two-to-one ratio.

The S&P 500 posted 30 new highs and seven new lows; the Nasdaq recorded 56 new highs and 180 new lows.

Volume on U.S. exchanges was relatively heavy, with 11.8 billion shares traded, compared with an average of 11.5 billion shares over the previous 20 sessions.

(Reporting by Noel Randewich in Oakland, CaliforniaAdditional reporting by Johann M Cherian and Ankika Biswas in BengaluruEditing by Shounak Dasgupta and Matthew Lewis)

By Noel Randewich and Ankika Biswas

(Reuters) -U.S. stocks ended higher on Thursday, as AI optimism drove gains in Nvidia and other chip stocks, while doubts about interest rate cuts hit utilities and real-estate shares.

U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) soared after the world’s largest contract semiconductor maker projected 2024 revenue growth of more than 20% on booming demand for high-end chips used in artificial-intelligence applications.

Heavyweight chipmaker Nvidia hit an intraday record high, and it was the most-traded company on Wall Street, with over $24 billion worth of shares exchanged. Rival Advanced Micro Devices also notched a record high.

Broadcom, Qualcomm and Marvell Technology gained. The Philadelphia SE semiconductor index rallied and approached its December 2023 record high.

Apple jumped after BofA Global Research upgraded the iPhone maker’s stock to “buy” from “neutral.” That helped the S&P 500 information technology index reach a record high.

According to preliminary data, the S&P 500 gained 41.32 points, or 0.87%, to end at 4,780.53 points, while the Nasdaq Composite gained 200.19 points, or 1.35%, to 15,055.81. The Dow Jones Industrial Average rose 202.00 points, or 0.54%, to 37,468.67.

Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late-2022 low, suggesting solid job growth in January.

Jake Dollarhide, CEO of Longbow Asset Management, said he has recently been more conservative with his clients’ money as investors become less sure the Federal Reserve will begin cutting interest rates in March.

The S&P 500 lost ground on Tuesday and Wednesday following strong December retail sales data and after policymakers talked down expectations for an early start to rate cuts.

“People are starting to say, ‘Hey, we’ve made the assumption the Fed is going to start cutting in March, but will they, and what does it look like if they don’t?’” Dollarhide said.

Traders now see a 56% chance for a 25-basis-point rate cut in March, compared with a chance above 80% a month ago, according to the CME Group’s FedWatch Tool.

Interest rate-sensitive sectors dipped, with the S&P 500 real estate index and utilities index among the deepest sector decliners.

Atlanta Federal Reserve President Raphael Bostic said he was open to reducing rates sooner than he had anticipated if there is “convincing” evidence in coming months that inflation is falling faster than he expected. Bostic had previously said he expected it would be appropriate to cut rates in the second half of 2024.

Humana dropped after the health insurer forecast fourth-quarter medical costs to be higher than previously expected. Peer UnitedHealth also fell.

KeyCorp dropped after the lender posted a decline in fourth-quarter profit, while Birkenstock sank almost 9% after missing quarterly profit expectations.

Spirit Airlines tumbled after Citigroup downgraded the stock to “sell” from “neutral.”

(Reporting by Noel Randewich in Oakland, CaliforniaAdditional reporting by Johann M Cherian and Ankika Biswas in BengaluruEditing by Shounak Dasgupta and Matthew Lewis)

By Zaheer Kachwala

(Reuters) -Google will invest $1 billion on building a data centre just outside of London, the U.S. technology giant said on Thursday, in its latest investment in Britain as it meets growing demand for internet services in the region.

The data centre, located on a 33-acre (13-hectare) site bought by Google in 2020, will be located in the town of Waltham Cross, about 15 miles north of central London, the Alphabet-owned company said in a statement.

The British government, which is pushing for investment by businesses to help fund new infrastructure, particularly in growth industries like technology and artificial intelligence, described Google’s investment as a “huge vote of confidence” in the UK.

“Google’s $1 billion investment is testament to the fact that the UK is a centre of excellence in technology and has huge potential for growth,” Prime Minister Rishi Sunak said in the Google statement.

The investment follows Google’s $1 billion purchase of a central London office building in 2022, close to Covent Garden, and another site in nearby King’s Cross, where it is building a new office and where its AI company DeepMind is also based.

It also comes weeks after Microsoft unveiled plans to pump 2.5 billion pounds ($3.2 billion) into Britain over three years, including in growing its data centre capacity, to underpin future AI services.

“This new data centre will help meet growing demand for our AI and cloud services and bring crucial compute capacity to businesses across the UK while creating construction and technical jobs,” Alphabet Chief Financial Officer Ruth Porat said in the statement.

Google, which employs over 7,000 people in Britain, also said that waste heat generated from the data centre would be an opportunity for energy conservation that can benefit the local community.

($1 = 0.7881 pound)

(Reporting by Zaheer Kachwala in Bengaluru and Sachin Ravikumar in London; Editing by Krishna Chandra Eluri, Maju Samuel and Jonathan Oatis)

By Holger Hansen

BERLIN (Reuters) -Germany is able to stick to its self-imposed 2024 debt brake in a 476.8 billion euros ($517.8 billion) proposal drawn up by the parliamentary budget committee on Thursday, according to the draft seen by Reuters and people familiar with the matter.

Under the proposal, which concludes months of tense negotiation over Germany’s 2024 spending, Europe’s top economy can issue 39 billion euros in new debt, which would be within the government’s limit.

The committee agreed on the proposal in deliberations that ended on Thursday, three people familiar with the matter said. Germany’s lower house is scheduled to approve the 2024 budget on Feb. 2.

The debt brake, enshrined in the German constitution, restricts the public deficit to 0.35% of gross domestic product.

The government in 2023 decided to suspend the cap on borrowing after a Constitutional Court ruling blocked the repurposing of unused pandemic emergency funds.

Chancellor Olaf Scholz’s three-party coalition announced an agreement on key points of the 2024 draft budget in December following weeks of talks, after the court ruling threw the government’s finances into disarray. Some changes to the agreement have been made since then.

Green Party politician Sven-Christian Kindler earlier said Germany need not suspend its brake on debt issuance in 2024 to finance rebuilding after major floods in western Germany in 2021.

Finance Minister Christian Lindner welcomed the draft that effectively rules out an exception to the country’s debt brake, which became a major sticking point among the coalition partners.

“I can currently not imagine anything that would justify that,” he told Reuters in an interview on Thursday on the sidelines of the World Economic Forum in Davos.

On Tuesday, provisional budget accounts for last year published by the finance ministry showed Germany had 6.3 billion euros more than expected to help finance this year’s budget.

Some of that money can go into a special fund, created in 2021 following floods in the Ahr Valley, that has been earmarked 2.7 billion euros this year.

($1 = 0.9208 euros)

(Reporting by Holger Hansen; Additional reporting by Maria Martinez and Victoria Waldersee; Writing by Christoph Steitz; Editing by Chris Reese, Leslie Adler and Richard Chang)

By Chuck Mikolajczak

NEW YORK (Reuters) -The dollar index climbed for a fifth straight session on Thursday after labor market data showed job growth, keeping expectations for an interest rate cut from the Federal Reserve in check.

Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended Jan. 13, the lowest level since September 2022, the Labor Department said on Thursday, short of the 207,000 expectation of economists polled by Reuters.

The data followed a stronger than expected retail sales report on Wednesday.

“The market’s doing what it loves to do and squeeze people out of crowded positioning. Ever since the start of the year, everything sort of flipped,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull in Toronto.

“You’ve had central bankers now push back on 2024 rate cut pricing, and I’d say on balance, economic data has been better than expected.”

The U.S. dollar index, which measures the currency against a basket of six peers, was up 0.14% at 103.47, after reaching 103.69 on Wednesday, its highest since Dec. 13. It was on track for its fifth straight session of gains, its longest streak since August.

Expectations for a cut from the Fed in March of at least 25 basis points (bps) are currently at 57.1%, according to CME’s FedWatch Tool, compared with 55.5% in the prior session and a decline from the 73.2% a week ago.

A separate report from the U.S. Commerce Department showed single-family homebuilding took a breather in December after a recent stretch of gains. New construction remains underpinned by a shortage of previously owned houses for sale.

Fed officials, including Governor Christopher Waller this week, have pushed back against expectations of an aggressive round of rate cuts, suggesting the speed and timing will be slower than market participants had initially priced in.

Atlanta Federal Reserve President Raphael Bostic said on Thursday he was open to reducing U.S. interest rates sooner than the third quarter he had anticipated if there was “convincing” evidence in coming months that inflation is falling faster than he expected.

The dollar was roughly even against the yen at 148.14 on Wednesday after rising to 148.52 on Wednesday, its strongest since Nov. 28.

The Bank of Japan (BOJ) is scheduled to hold a policy meeting next Monday and Tuesday, and is likely to maintain its ultra-loose monetary settings.

The euro was down 0.14% at $1.0866 after accounts from the European Central Bank’s December meeting showed policymakers appeared fairly confident that inflation was heading back to target, but saw risks that still warranted steady policy and high borrowing costs.

Sterling was up 0.17% at $1.269, building on gains from the prior session when data showed inflation unexpectedly accelerated in December, buttressing expectations the Bank of England will be slower to cut rates than its peers.

In cryptocurrencies, bitcoin fell 3.09% to $41,318.00.

(Reporting by Chuck Mikolajczak; editing by Barbara Lewis and Jonathan Oatis)

By Laura Sanicola

(Reuters) – Oil prices settled higher on Thursday after the International Energy Agency (IEA) joined producer group OPEC in forecasting strong growth in global oil demand and as cold winter weather disrupted U.S. crude output while the government reported a big weekly draw in crude inventories.

Oil traders also worried about geopolitical risks in the Middle East. Pakistan conducted strikes inside Iran, targeting Baluchi separatist militants, the country’s foreign ministry said, two days after Iranian strikes inside Pakistani territory.

Brent crude futures settled up $1.22, or 1.6%, to $79.10 a barrel, while U.S. West Texas Intermediate crude futures settled up $1.52, or 2%, $74.08.

The U.S. Energy Information Administration reported a larger-than-expected draw in crude inventories of 2.5 million barrels in the week ended Jan. 12.

“The fear of another large build of total inventories has not materialized, modestly supporting prices,” said Giovanni Staunovo, analyst at UBS.

The IEA monthly report said it expects oil demand to grow by 1.24 million barrels per day (bpd) in 2024, up 180,000 bpd from its previous projection.

On Wednesday, the Organization of the Petroleum Producing Countries (OPEC) said it expected demand growth of 2.25 million bpd this year, unchanged from its forecast in December. The producer group also said oil demand is expected to rise by a robust 1.85 million bpd in 2025 to 106.21 million bpd.

The IEA’s executive director, Fatih Birol, told the Reuters Global Markets Forum he expects oil markets to be “comfortable and balanced” this year despite Middle East tensions, rising supply and slowing demand growth.

In the United States, about 40% of oil output in North Dakota’s oil output remained shut-in due to extreme cold weather and operational challenges, the top oil-producing state’s pipeline authority said on Wednesday.

Last week, the United States produced another record of 13.3 million barrels per day of crude oil, the EIA data showed.

Oil’s range-bound trading in recent days reinforces the narrative that investors are shrugging off concern that tankers may be at risk from attacks in the Red Sea, said Ehsan Khoman, analyst at bank MUFG.

Oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, ship-tracking data shows, though tensions in the region continued to disrupt global shipping and trade.

“The turmoil in the Mideast has kicked up freight and insurance rates appreciably but (has) not yet affected total global oil supply other than delaying shipments toward Europe and other regions,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Attacks by Yemen-based Houthi militants against ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The United States on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.

The Iran-aligned Houthis have said they are acting in solidarity with Palestinians during Israel’s Gaza war.

(Reporting by Laura Sanicola, Additional reporting by Ahmad Ghaddar; in London and Jeslyn Lerh in Singapore; Editing by David Goodman, Will Dunham and David Gregorio)

NEW YORK (Reuters) -Meta CEO Mark Zuckerberg said on Thursday that the company was bringing its AI research team “closer together” with a more business-focused generative AI team launched last year, doubling down on a push to get the technology into products.

The social media giant was building out its infrastructure to accommodate the push and planned to have about 350,000 H100 GPUs (graphics processing units) from chip designer Nvidia by the end of the year, Zuckerberg said in posts on Meta’s Instagram and Threads platforms.

In combination with equivalent chips from other suppliers, Meta will have about 600,000 total GPUs by the end of the year, he said.

That amount would make Meta’s system, once finished, among the largest in the technology industry.

By contrast, Amazon last autumn said it was building out a system with 100,000 of its Trainium2 chips, while Oracle brought online a system with 32,000 Nvidia H100 GPUs.

A Meta spokesperson declined to specify which GPU suppliers the company was using aside from market leader Nvidia, though it has said publicly it also plans to use chips from AMD. Reuters has previously reported it has an internally designed GPU-like chip in the works, as well.

Meta has scrambled to build out its computing arsenal to support a mobilization around generative AI this past year, after years of producing leading research on the technology through its FAIR team but scant focus on building it into its core social media products and AR/VR hardware devices.

The company convened a “GenAI” team last year to lead an effort to change that after the breakout success of OpenAI’s ChatGPT chatbot in late 2022.

Since then, Meta has launched a commercial version of its Llama large language model, ad tools that can generate image backgrounds from text prompts and a “Meta AI” chatbot that can be accessed directly via its Ray-Ban smart glasses.

In his posts on Thursday, Zuckerberg said the company was currently training a third version of the Llama model.

He also tied the AI investments back to the pivot to the AR/VR-driven metaverse vision that inspired him to change the company’s name to Meta in 2021, saying people would “need new devices” like glasses for interacting with AI.

(Reporting by Katie Paul in New York; additional reporting by Stephen Nellis in San Francisco; Editing by Franklin Paul and Lisa Shumaker)

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices were near flat on Wednesday as severe cold that disrupted some U.S. oil production offset disappointing economic growth in China that stoked worries about energy demand.

Brent crude futures settled down 41 cents to $77.88 a barrel. U.S. West Texas Intermediate crude futures (WTI) gained 16 cents at $72.56.

In North Dakota, a top oil-producing U.S. state, below-zero degrees Fahrenheit temperatures caused oil output there to fall by 650,000 to 700,000 barrels per day (bpd), more than half its typical output, the state said.

Those supply concerns caused U.S. crude futures to pare losses late in the session, after earlier falling by over $1 a barrel, said Andrew Lipow, president of Lipow Oil Associates.

U.S. domestic crude stockpiles were expected to have fallen last week – before most of the extreme cold set in – by about 300,000 million barrels, a Reuters poll showed ahead of weekly inventory data from the American Petroleum Institute and the government, due on Wednesday and Thursday, respectively.

Weakening prices on Wednesday, China’s economy in the fourth quarter expanded by 5.2% year on year, missing analysts expectations and calling into question forecasts that Chinese demand will fuel 2024 global oil growth.

The economic data “doesn’t end the headwinds over crude oil demand, the Chinese outlook for 2024 and 2025 is still bleak,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“(The) oil industry was backing the notion that, despite a bumpy recovery, oil demand from China has been resilient and will likely reach record levels in 2024.”

Still, China’s oil refinery throughput in 2023 rose 9.3% to a record high, indicating elevated demand even if it lagged some analysts’ expectations.

Other signs of steady Chinese demand have also appeared.

Investors kept an eye on naval and air conflicts in the Red Sea, which so far has not supported oil prices despite mounting concern about tankers having to pause or reroute, raising shipping costs and slowing deliveries.

Tensions remained high after the U.S. mounted fresh strikes against Iran-aligned Houthi militants in Yemen on Tuesday after a Houthi missile hit a Greek vessel.

The International Energy Agency (IEA) expects oil markets to be in a “comfortable and balanced position” this year, despite Middle East tensions amid a rising supply and slowing demand growth outlook, its executive director Fatih Birol told the Reuters Global Markets Forum.

An optimistic OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024. OPEC said that 2025 will bring a “robust” increase in oil use, led by China and the Middle East.

The U.S. dollar hovered near a one-month high after comments from Federal Reserve officials lowered expectations for aggressive interest rate cuts. A stronger greenback reduces demand for dollar-denominated oil from buyers using other currencies.

(Reporting by Stephanie Kelly in New York, Paul Carsten in London, Muyu Xu in Singapore and Colleen Howe in BeijingEditing by Marguerita Choy, David Gregorio and Nick Zieminski)