Oil Futures Rise as Economic Outlook Improves
Improving economic data from the world's two largest oil consumers and a drop in oil supplies at a key storage hub sent U.S. crude-oil futures higher Thursday.
Traders rallied behind oil after a drop in U.S. jobless claims, coupled with improving Chinese manufacturing activity, suggested that demand for oil and fuel products could be headed higher. New applications for unemployment benefits in the U.S. fell to 330,000 last week, the lowest since January 2008.
"The unemployment claims number really helped," said Peter Donovan, a broker at Vantage Trading in New York. And after a sharp price decline Wednesday, he said, "we were probably due for a little bit of a bounce back."
Light, sweet crude for March delivery settled 72 cents, or 0.8%, higher at $95.95 a barrel on the New York Mercantile Exchange.
The gains helped reverse a $1.01 drop Wednesday due to a cut in the capacity of the Seaway pipeline, which runs to Houston from a supply hub in Oklahoma. The reduced capacity raised concerns that oil supplies will build up in the middle of the U.S., far from refineries along the Gulf Coast. On Thursday, pipeline operators said the capacity cut was due to a major refinery that lowered demand due to maintenance and wasn't the result of problems with the pipeline.
"The market reaction was that the Seaway problem is going to be short lived," said Andy Lipow, president of Lipow Oil Associates.
Brent crude on the ICE futures exchange rose 48 cents to $113.28 a barrel.
The gains Thursday kept oil futures above $95 a barrel for the fifth-straight session. U.S. oil prices have gained 12% since mid-December on an improving economic outlook as well as hopes that expanded pipelines will relieve the U.S. supply bottleneck.
Oil futures were also boosted Thursday by a report from the U.S. Energy Information Administration that showed crude stockpiles at the Cushing, Okla., pipeline hub fell by 500,000 barrels last week after seven-straight weeks of gains.
Total stockpiles at the supply depot rose above 50 million barrels for the first time ever earlier this year.
Surging production from new shale-oil fields in North Dakota, Texas and other states has overwhelmed existing transportation infrastructure, keeping U.S. oil prices depressed compared to prices overseas as pipeline operators try to link up supplies with refineries along the coasts. Storage declines in Cushing, if they continue, would signal that the glut is easing.
Front-month February reformulated gasoline blendstock, or RBOB, settled 2.91 cents higher at $2.8629 a gallon. February heating oil settled 0.83 cent higher at $3.0864 a gallon.
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