© Reuters. FILE PHOTO: A view of the Johan Sverdrup oilfield in the North Sea, January 7, 2020. Carina Johansen/NTB Scanpix/via REUTERS/File Photo

By Natalie Grover

LONDON (Reuters) -Global oil benchmark Brent hovered above $80 a barrel on Thursday after U.S. inflation data implied interest rates in the world’s biggest economy are close to their peak.

Data released on Wednesday showed U.S. consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside.

Markets expect one more interest rate rise before the U.S. rate-hiking cycle peaks. Higher rates can slow economic growth and reduce oil demand.

Oil prices have rallied by around 12% in two weeks, primarily in response to supply cuts from top producers Saudi Arabia and Russia, said Craig Erlam, senior market analyst at OANDA.

“Some profit-taking at these levels wouldn’t be hugely surprising and may have come sooner if not for the U.S. consumer price inflation data,” he said.

futures were up 20 cents to $80.31 per barrel by 1135 GMT, while U.S. West Texas Intermediate crude futures were up 11 cents at $75.86.

The futures contract structure of the global benchmark Brent indicates the market is tightening and that OPEC could be succeeding in its mission to support the market.

The premium of a front month Brent contract to a six-month February 2024 contract rose to $2.64 a barrel on Wednesday. At the end of the June, the front month contract was at a discount to the six month contract.

In the latest insights on the supply-demand balance, a report by the International Energy Agency (IEA) on Thursday predicted oil demand would hit a record high this year, but that broader economic headwinds and interest rate hikes meant the increase would be slightly less than previously anticipated.

Meanwhile, an OPEC report also published on Thursday, maintained an upbeat world oil demand outlook despite economic headwinds. It raised its growth forecast for 2023 and predicted only a slight slowdown in 2024 with China and India expected to continue to drive the expansion in fuel use.

In China, however, momentum in the post-pandemic recovery slowed with exports contracting last month at their fastest pace since the onset of the pandemic three years ago, the country’s Customs Bureau showed on Thursday.