Oil futures climbed on Thursday, with the U.S. benchmark scoring its biggest rally in a month as disappointing manufacturing data from China and the eurozone boosted prospects for economic stimulus measures, which could help increase energy demand.

News of a third straight weekly decline in U.S. crude inventories and tensions in the Middle East continued to provide support to oil. Natural-gas prices also climbed following a slightly smaller-than-expected increase in weekly U.S. stockpiles.

July crude CLN5, -1.98%  added $1.74, or 3%, to settle at $60.72 a barrel on the New York Mercantile Exchange. Based on the most-active contracts, that was Nymex oil’s largest one-day point and percentage gain since April 20 and the highest settlement in more than a week, according to FactSet data.

July Brent crude LCON5, -1.89%  on London’s ICE Futures exchange rose $1.51, or 2.3%, to $66.54 a barrel.

As the Federal Reserve “looks to defer interest rate hikes amid economic softness, and as Chinese manufacturing showed contraction once again, and as the eurozone economy sees slowing in both its manufacturing and services sectors, crude is back in the realm of ‘bad is good’ and rallying,” said Matt Smith, commodity analyst at Schneider Electric.

“The prospect of aforementioned deferred interest rate hikes are weakening the U.S. dollar DXY, +0.50% while the prospect of further stimulus from China and souped-up quantitative easing in the Eurozone is encouraging the [oil] market higher,” he said in a note.

The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, edged up to 49.1 in May, but it’s still below the 50 threshold that separates expansion from contraction.

In the eurozone, the economy slowed for the second straight month in May.

The minutes of the April FOMC meeting released Wednesday showed U.S. Federal Reserve officials hinting that they’re unlikely to raise interest rates in June amid a slowdown in economic growth. This can be supportive for commodities prices, including oil.

Commodities have been under pressure due to recent rate-hike expectations, as higher interest rates increase the cost of storing commodities, and make it less attractive for investors seeking better returns across assets.

Meanwhile, traders and shipping companies are keeping a close watch on the standoff between Iranian warships and U.S. and Saudi Arabian naval forces off the coast of Yemen. The United Nations said negotiations for a diplomatic solution to fighting in Yemen will begin May 28 in Geneva.

Oil prices had gained 1.7% on Wednesday after the EIA’s data showed that U.S. commercial crude-oil inventories fell by 2.7 million barrels in the week ended May 15.

“Crude stocks continued to draw seasonally, and we expect crude and product demand to remain supportive as economic activity rebounds following a weak first quarter,” Société Générale said in a report.

Back on Nymex, June gasoline RBM5, -1.80% added 4.1 cents, or 2%, 0.1% to $2.082 a gallon, while June heating oil HOM5, -1.43%  ended at $1.986, up 4 cents, or 2.1%.

Natural-gas futures finished higher after the EIA said supplies of natural gas rose by 92 billion cubic feet for the week ended May 15. That was a bit less than the climb of between 93 billion cubic feet and 97 billion cubic feet expected by analysts polled by Platts.

June natural gas NGM15, -1.39%  tacked on 3.4 cents, or 1.2%, to $2.949 per million British thermal units.