Nymex Crude Rallies Nearly 5%; Data Buoy Hopes

Crude-oil futures vaulted almost 5% to close above $91 a barrel after better-than-expected U.S. data fueled hopes that economic strengthening would lead to increased oil demand.

Light, sweet crude for September delivery rose $4.27, or 4.9%, to settle at $91.40 a barrel on the New York Mercantile Exchange. The contract reached $91.74, its highest intraday price since July 20, before pulling back slightly. Brent crude on ICE Futures Europe settled up $3.04, or 2.9%, at $108.94 a barrel.

The U.S. economy added 163,000 jobs in July, outpacing the expected gain of 95,000. But unemployment rose to 8.3%.

More jobs added could mean a rise in demand for oil. A weak jobs market in the U.S., the world's biggest oil consumer, has weighed on crude prices for much of the year, keeping motorists off the road and eroding demand for goods produced from oil.

"We're definitely seeing that there's enough here to support (prices)," said Carl Larry, an analyst with Oil Outlooks & Opinions, of the jobs report.

The economic outlook was further buoyed by the Institute for Supply Management's index of U.S. nonmanufacturing activity, which climbed to 52.6 in July from 52.1 in June.

The data fueled hopes that the U.S. economy could see renewed strength without another round of Federal Reserve intervention, said Tom Pawlicki, energy analyst with EOXLive.

Oil got another boost by a slide in the U.S. dollar, as the positive data sent traders out of the dollar and into riskier assets and currencies. The Wall Street Journal Dollar Index, which tracks the greenback against a basket of other commodities, was recently down 1% at 71.503.

"You had a big selloff in the dollar as soon as the (jobs) report came out," said Stephen Schork of the Schork Report. "The dollar plunges, oil jumps."

In addition, some traders bought Nymex oil futures to profit on the price difference between the West Texas Intermediate prices and Brent prices, which hit a two-month high of $18.70 on Thursday, said Gene McGillian, broker and analyst for Tradition Energy. As market participants bought WTI crude to take advantage of its discount to Brent, Nymex prices climbed higher, he said.

Crude-oil prices gained 1.4% on the week. A higher-than-expected decline in inventories supported prices, but investor optimism was damped earlier in the week by the failure of both the Fed and the European Central Bank to announce the new stimulus measures that some traders had hoped were on their way.

Front-month September reformulated gasoline blendstock, or RBOB, rose 6.14 cents, or 2.1%, to $2.9310 a gallon. September heating oil rose 8.38 cents, or 3%, to $2.9261 a gallon.

Copyright (c) 2013 Dow Jones & Company, Inc.

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