Oil Steady as U.S. Jobless Claims Fall, Dollar Rallies

Oil was little changed as reports signaled that the U.S. economy was strengthening and the dollar surged against the euro, curbing investors’ appetite for commodities.

Futures, which climbed in intraday trading after reports that initial jobless claims dropped last week and the U.S. trade deficit was less than expected, retreated as the dollar advanced against the euro on concern Europe’s economy will deteriorate further. A rising U.S. currency and weakening euro decrease the appeal of raw materials as an investment.

“The dollar is stronger and that’s likely to keep a lid on prices,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Crude has been as high as $94.21 and it keeps coming back.”

Crude oil for September delivery rose 1 cent to settle at $93.36 a barrel on the New York Mercantile Exchange. Futures traded between $93.07 and $94.21 today. Prices are up 20 percent from $77.69 on June 28, the lowest close this year.

Brent oil for September settlement increased $1.08, or 1 percent, to $113.22 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate crude, the grade traded in New York, increased to $19.86, the highest level in four months.

U.S. Economy

Jobless claims fell 6,000 to 361,000 last week, below the 370,000 median forecast of 43 economists surveyed by Bloomberg. The U.S. trade deficit for June totaled $42.9 billion, less than the $47.5 billion median forecast of 69 economists who replied to a Bloomberg survey.

The better-than-projected trade reading may help boost second-quarter growth figures when the government revises the data this month. The U.S. economy grew at a 1.5 percent annual pace in the April-through-June period, compared with a 2 percent rate in the previous three months, the Commerce Department reported July 27.

“The positive U.S. economic data is having an impact on crude,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “These are positive growth signals. The trade number is a sign that second- quarter GDP will be revised higher.”

Oil pared the gain as the dollar climbed as much as 0.8 percent against the euro after economists in a European Central Bank survey cut their 2013 growth forecast to 0.6 percent from 1 percent. The Standard & Poor’s 500 Index (SPX) and the Dow Jones Industrial Average were also little changed today.

Home Prices

In another sign of economic improvement, prices for single- family homes climbed in most U.S. cities in the second quarter and values nationally jumped the most since 2006. The median sales price increased from a year earlier in 110 of 147 metropolitan areas measured, the National Association of Realtors said. In the first quarter, 74 areas had gains.

Slower consumer-price inflation in China may encourage policy makers to add measures to reverse the economic slowdown and boost demand. Consumer prices rose 1.8 percent from a year earlier, the National Bureau of Statistics said in Beijing. That compared with the 1.7 percent median forecast of 33 economists in a Bloomberg survey and a 2.2 percent gain in June.

The leaders of China’s ruling Communist Party pledged last week to keep adjusting policies to ensure the economy expands at a stable rate this year. China was the second-biggest crude- consuming country, accounting for 11 percent of global demand in 2011, compared with 21 percent for the U.S., according to BP Plc (BP/)’s Statistical Review of World Energy released in June.

‘Green Light’

“The market is in a mode where all that matters is the prospect of central bank monetary stimulus,” said Guy Wolf, a strategist at Marex Spectron Group Ltd., a London-based commodities brokerage. “So soft growth data, without inflationary pressure, is a green light for central banks. Further stimulus in China is almost a certainty.”

The Organization of Petroleum Exporting Countries said in its Monthly Oil Market Report that it will need to supply 29.5 million barrels of crude a day next year. That’s down 100,000 a day from what the 12-member group’s Vienna-based secretariat projected last month.

Iraq’s crude output rose above 3 million barrels a day last month for the first time since the 2003 U.S.-led invasion that toppled Saddam Hussein, OPEC said. Iraq pumped 3.08 million barrels a day in July, 115,000 barrels more than the previous month, the report showed.

Electronic trading volume on the Nymex was 432,914 contracts as of 2:42 p.m. in New York. Volume totaled 615,755 contracts yesterday, 11 percent above the three-month average. Open interest was 1.45 million.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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