(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 has likely peaked. 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, Craig Erlam, senior market analyst at OANDA, said.

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

Brent crude futures were up 25 cents to $80.36 per barrel by 0923 GMT, while U.S. West Texas Intermediate crude futures were up 17 cents at $75.92.

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.

In China, 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.