Oil Climbs as US Jobs Data Alleviates Concern About Economy
(Bloomberg) - Oil rose after stronger U.S. payroll growth allayed concern that the economy of the world’s largest crude-consuming nation is slowing.
Futures climbed 0.6 percent in New York. America’s job market stirred to life in June as payrolls climbed by 287,000, the most since October, after a two-month lull. Oil tumbled 4.8 percent Thursday after government data showed U.S. crude stockpiles fell 2.2 million barrels last week, a smaller drop than forecasts and industry data suggested. The report showed U.S. production slumped to the lowest level since May 2014.
"The jobs number gave us a little bit of optimism about the economy," said Phil Flynn, senior market analyst at Price Futures Group in Chicago. "There’s been a lot of concern about the economy and what that will mean for demand."
Oil has traded between $44 and $52 a barrel in the last month after almost doubling from a 12-year low in February amid supply disruptions and falling U.S. output. The recovery has prompted American producers to begin returning drilling rigs to service, leading to speculation the output decline will slow.
West Texas Intermediate crude for August delivery rose 27 cents to close at $45.41 a barrel on the New York Mercantile Exchange. Futures capped a 7.3 percent weekly decline, the most since February. The grade settled at $45.14 on Thursday, the lowest since May 10. Total volume traded near the 100-day average at 2:50 p.m.
Brent for September settlement increased 36 cents, or 0.8 percent, to $46.76 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a 64-cent premium to WTI for the same month.
Crude production in the U.S. tumbled to 8.43 million barrels a day in the week ended July 1, the lowest since May 2014, according to the EIA report. The number of active oil rigs in the U.S. has increased in five of the last six weeks, Baker Hughes Inc. data show. Explorers have idled more than 1,000 oil rigs since the start of last year.
U.S. crude inventories dropped a seventh week to 524.4 million barrels, the lowest since March 11, according to EIA data. A 2.5 million-barrel decline was forecast in a Bloomberg survey and the industry-funded American Petroleum Institute reported a 6.7 million drop. Supplies have fallen from an 87-year high of 543.4 million barrels in the last week of April.
A strike by oil workers in Nigeria entered a second day and a gradual shutdown of facilities is in progress, the Pengassan union said. The government will meet with union leaders on Monday, Oil Minister Emmanuel Kachikwu said. “Gaps in confidence” are hindering talks with rebels who are attacking the nation’s oil facilities, he said. Argentina is importing crude for the third time this year, putting pressure on the government to ease its fixed price for domestic oil. While oil inventories and production continue to decrease, the EIA may be underestimating the output from drilled-but-uncompleted shale wells, Citigroup Inc.’s analysts including Eric Lee said in an emailed report dated July 7.
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