Crude Oil Rises on New Signs of Improving US Economy
U.S. crude futures rose Thursday, breaking above $95 a barrel as an improving jobs outlook and optimism about the U.S. economy boosted oil to the highest level since September.
The number of U.S. workers filing for jobless benefits fell to the lowest level in five years, raising hopes that improvement in the labor market means a better outlook for the still-tepid economic recovery. Also, U.S. housing starts jumped 12% last month, well above economists' expectations.
The data offered a boost to oil prices held in check recently by worries about the broader economic outlook.
Investors are concerned that rising oil supplies, particularly in the U.S. and Canada, have started to outpace demand, which has kept prices in a trading range between roughly $85 and $95 a barrel for the past four months. But an improving economy should lead to higher fuel demand, say analysts.
"The economic data that came out this morning, it was pretty impressive," said Carl Larry, head of trading advisor Oil Outlooks and Opinions.
Light, sweet crude for February delivery settled $1.25, or 1.3%, higher at $95.49 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for March delivery traded $1.38 higher at $111.06 a barrel.
A slumping dollar against the euro helped boost crude prices, by making U.S.-dollar-denominated oil cheaper for buyers using other currencies. U.S. equities markets also rose, with the Dow Jones Industrial Average recently 120 points, or 0.9%, higher at 13,631. Oil traders often use the stock market as a gauge of economic growth expectations.
The rise in oil futures on Thursday added to a move higher in the previous session. Oil-stockpile data released Wednesday showed domestic crude-oil stockpiles fell by 951,000 barrels, compared to an analyst estimate calling for a 2.1-million-barrel increase.
Of course, some market watchers remain skeptical about the latest rally. Tim Evans, an analyst at Citi Futures Perspectives, noted that fuel demand remains depressed despite recent growth in gross domestic product. And crude-oil stocks are still at multi-decade highs for this time of year.
Meanwhile, investors are following the hostage situation in Algeria. Militants with possible links to al Qaeda took about 40 hostages, including some Americans, at an Algerian natural-gas field. The Algerian military conducted an assault at the facility, and governments were trying to find out more information on the raid. An Algerian official, meanwhile, said some hostages were killed.
Algeria, a member of the Organization of the Petroleum Exporting Countries, produced an average of 1.3 million barrels of oil a day in 2011, according to the U.S. Energy Department. The country exported 750,000 barrels a day, with over 40% headed to North America.
"Algeria is a significant exporter of oil, so any sort of geopolitical concern there can underpin some buying in the market," said Stephen Schork, president of consultant The Schork Group.
Front-month February reformulated gasoline blendstock, or RBOB, settled 4.70 cents, or 1.7%, higher at $2.7684 a gallon. February heating oil settled 2.21 cents, or 0.7%, higher at $3.0212 a gallon.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea