Crude Rises On Host Of Positive Economic News
Oil futures rose in volatile early trading Thursday on a host of bullish economic news, including a drop in initial jobless claims, an increase in business productivity and a European interest rate cut.
Light, sweet crude for December delivery was up $1.49, or 1.6%, at $94.00 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange was up $1.28, or 1.2%, at $110.62 a barrel.
The U.S. said initial jobless claims fell 9,000, to 397,000 in the week ended Oct. 29, slightly lower than analyst expectations of 400,000. Productivity for the quarter was up 3.1% at an annualized rate, and the ECB reduced interest rates by a 0.25 percentage point to 1.25%.
Summit Energy analyst Matt Smith called the European Central Bank's move an "absolutely fabulous curveball" and said it would likely be good for oil prices. "It shows that the ECB not only acknowledges the frailty of the region's economy, but is willing to take whatever steps needed to promote stability," he said in a note.
The market is continuing a rally that has brought the price of oil up nearly $20 a barrel since the beginning of last month, primarily driven by hopes for a comprehensive solution to the euro-zone debt crisis and U.S. economic data that has been less bad than it could have been. Still, the rise has continued in the face of news that has sent the market into a tailspin before--including the Fed lowering growth targets, slowing economic growth in China and Greek recalcitrance to the bailout plan.
Traders and analysts say the market's continued climb may be due more to hope for Fed stimulus or a positive resolution on Greece than the current indicators.
"We're back in the perception trade again, or what the perception might be two to three months down the road," said Dominick Chirichella, an oil analyst at the Energy Management Institute. "The only constant I'd expect to see here in the next couple days is an above-normal level of volatility."
Front-month December reformulated gasoline blendstock, or RBOB, was up 1.78 cents, or 1.2%, to $2.6450 a gallon. December heating oil was up 2.68 cents, or 1.0%, to $3.0295 a gallon.