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.
Copyright (c) 2012 Dow Jones & Company, Inc.
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