Oil Increases to Nine-Month High on U.S. Jobs Report, German Confidence
Oil rose to the highest level in more than nine months as jobless claims held at a four-year low in the U.S. and German business confidence surpassed forecasts, signs fuel consumption may improve.
Crude increased for a sixth day after the Labor Department reported applications for jobless benefits were unchanged last week at 351,000, the fewest since March 2008. The growth in German confidence eased concern that the region’s largest economy would be affected by the European debt crisis.
“Everybody is still watching economic data,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “The German confidence index and other data give people reason to stay bullish.”
Crude oil for April delivery gained $1.55, or 1.5 percent, to $107.83 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Oil has risen 9.9 percent in the past year.
Brent oil for April settlement increased 72 cents, or 0.6 percent, to $123.62 a barrel on the ICE Futures Europe exchange in London.
U.S. jobless claims were lower than the median projection of 355,000 in a Bloomberg News survey, marking the fourth straight week that the figures have been better than forecast.
The Munich-based Ifo institute said its German business climate index, based on a survey of 7,000 executives, climbed to 109.6 in February from January’s 108.3. Economists predicted an increase to 108.8, according to a Bloomberg News survey. The February reading is the fourth straight gain and the highest level since July.
European Crisis
“We are looking at the strong number coming out of Germany,” said Phil Flynn, an analyst at PFGBest in Chicago. “The jobs numbers were not very exciting but it can help the market.”
Oil has advanced 9.1 percent this year as European officials approved a second Greek bailout to prevent a debt default that could have derailed the regional economy and as tensions mounted between Iran and Western countries, threatening Persian Gulf oil supplies.
The 27 members of the European Union accounted for 16 percent of global oil consumption last year, according to BP Plc’s annual Statistical Review of World Energy.
Iran, OPEC’s second-largest oil producer after Saudi Arabia, said earlier this week that it stopped selling crude to France and Britain in a move designed to pre-empt European sanctions set to begin in four months. The EU agreed Jan. 23 to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
Middle East
“The market is up because of the Middle East,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
Turkiye Halk Bankasi AS (HALKB), the Turkish bank that handles payments for Iranian oil, will stop processing transactions for supplies into Turkish refineries from July amid tightening Western sanctions against the Persian Gulf state.
Tupras Turkiye Petrol Rafinerileri AS (TUPRS), which operates four refineries, won’t be able to use the bank from the end of June unless it gets a U.S. waiver, a Tupras official said today, declining to be identified citing company policy.
Oil prices also gained after the Energy Department reported inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil traded on the Nymex, fell 1 percent to 32.2 million barrels. It’s the first decline in five weeks.
“I can’t imagine that’s pushing up WTI today but it could be supportive,” Bentz said.
U.S. Inventories
Prices fell earlier after the Energy Department said U.S. total oil consumption dropped 1.4 percent to 18.1 million barrels a day in the four weeks ended Feb. 17, the lowest level in more than 14 years.
Oil supplies increased 1.63 million barrels to 340.7 million last week, the most since Sept. 23, according to the department. They were forecast to grow 1.35 million barrels based on the median of 10 analyst estimates in a Bloomberg News survey.
“The inventory numbers are bearish,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It’s not having that much of an impact on prices in part because of the countervailing factors such as the good weekly jobless claims number.”
Electronic trading volume on the Nymex was 664,786 contracts as of 3:36 p.m. in New York. Volume totaled 556,363 contracts yesterday, 6.5 percent below the three-month average. Open interest was 1.46 million contracts.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net
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