Brent rises toward $86 as cooling US jobs market buoys rate cut hopes
Also fuelling prices were worries of escalating conflict in the Middle East, with fears of supply disruption in the major oil-producing region.
Brent crude futures were up 78 cents, or 0.9%, to $85.85 a barrel by 1349 GMT, having earlier hit $85.89, a high not seen since 1 May.
U.S. West Texas Intermediate (WTI) futures for July, which expire on Thursday, gained 70 cents, or 0.9%, to $82.27.
There was no WTI settlement on Wednesday because of a U.S. public holiday, which kept trading largely subdued. The more active August contract was up 60 cents at $81.31.
The number of Americans filing new claims for unemployment benefits fell last week.
Labour market momentum has ebbed in tandem with the overall economy as the Federal Reserve tries to tame inflation. With that pressure now subsiding, a rate cut this year remains on the table.
That could bolster oil prices, which have been dragged down this year by lacklustre global demand. A U.S. rate cut would make borrowing cheaper in the world's largest economy, galvanising the appetite for oil as production picks up.
Oil prices are also likely to remain supported by a growing geopolitical risk premium driven by conflict in the Middle East, said ActivTrades analyst Ricardo Evangelista.
Israeli forces pounded areas in the central Gaza Strip overnight, while tanks deepened their advance into Rafah in the south.
However, expectations of an inventories build appear to be overshadowing fears of escalating geopolitical stress for now, said Priyanka Sachdeva, senior
