Crude oil edged higher after a government report showed that fewer Americans filed applications for unemployment benefit last week.
Futures climbed from the lowest level in almost four months after the Labor Department said jobless claims fell by 16,000 to 414,000 in the week ended June 11. Oil dropped earlier, extending yesterday’s 4.6 percent slide, as Greek Prime Minister George Papandreou sought to win a confidence vote and violence erupted over budget cuts and austerity measures needed for aid.
“The better-than-expected economic numbers this morning are helping give the market a pop,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. “Prices fell more than was justified yesterday on the Greek concerns.”
Crude oil for July delivery rose 14 cents to settle at $94.95 a barrel on the New York Mercantile Exchange. The contract fell $4.56 to $94.81 yesterday, the lowest settlement since Feb. 22. Futures are up 22 percent from a year ago.
Brent oil for August delivery increased $1.01, or 0.9 percent, to end the session at $114.02 a barrel on the London- based ICE Futures Europe exchange.
Economists surveyed by Bloomberg News projected 420,000 filings for unemployment benefits, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments decreased last week, the department said in Washington.
Work began on 560,000 houses in the U.S. at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. Building permits, a sign of future construction, also increased.
“It’s always good to see a drop in the number of new jobless claims and a rise in housing starts,” said Peter Beutel, the president of Cameron Hanover Inc., an energy advisory company in New Canaan, Connecticut. The employment and housing outlook remains poor, he said. “We’re a long way from seeing them be engines of growth in the economy.”
The euro fell for a second day to a three-week low of $1.4074 after Het Financieele Dagblad, a Dutch newspaper, cited European Central Bank Governing Council member Nout Wellink as saying the region’s emergency fund should be doubled.
“There will come a point when the European fiscal crisis is priced in, but we aren’t there yet” said Katherine Spector, commodities strategist with CIBC World Markets Corp. in New York. “The Greeks will probably have to restructure their debt. At some point the end game will be clear.”
The currency was also dragged lower on concern a reshuffling of Greek Prime Minister George Papandreou’s cabinet will lead to a renegotiation of aid terms. A stronger dollar typically makes commodities less attractive as an investment.
Papandreou is seeking to win a confidence vote as violence erupted over budget cuts and austerity measures needed for international aid. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet tomorrow in Berlin, with pressure increasing for the leaders to reach an accord on a rescue package for Greece.
“Continuing worries about the economy and fallout from the European debt crisis have put downward pressure on prices,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The loss of Libyan oil production and the problems in the Middle East will keep us from falling much lower.”
Libya won’t be able to raise oil production to pre-conflict levels of about 1.6 million barrels a day until 2014, according to the International Energy Agency. Output in the North African country has fallen to less than 200,000 barrels a day amid the uprising against leader Muammar Qaddafi, the Paris-based IEA said today in its Medium Term Oil and Gas Market report.
The Organization of Petroleum Exporting Countries will cut crude-oil loadings for the first time in seven weeks, according to tanker-tracker Oil Movements. The group will ship 22.81 million barrels a day in the four weeks to July 2, down 0.7 percent from the period ended June 4, the Halifax, England-based consultant said in a report today.
OPEC failed to agree on an output target when it met on June 8. Saudi Arabian Oil Minister Ali Al-Naimi pledged that day the kingdom would keep markets adequately supplied in the absence of an accord by the 12-member group.
‘Very Tight’ Supplies
Supplies may become “very tight” if OPEC doesn’t increase production to meet higher demand in July, Executive Director Nobuo Tanaka said in an interview with Bloomberg Television in St. Petersburg, Russia. Saudi Arabia is likely to deliver on its pledge to keep markets adequately supplied, he said.
Oil volume in electronic trading on the Nymex was 594,048 contracts as of 3:10 p.m. in New York. Volume totaled 1.05 million contracts yesterday, 57 percent above the average of the past three months. Open interest was 1.57 million contracts.
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