Oil Rises as Jobless Claims in U.S. Fall

Oil advanced after the fewest number of Americans in four years filed first-time applications for unemployment benefits and on concern that tension between Syria and Turkey will disrupt shipments from the Middle East.

Futures rose 0.9 percent as the Labor Department reported that claims for jobless benefits fell to 339,000 last week, the lowest level since February 2008. Turkey seized cargo on a Syrian passenger plane forced to land yesterday. Price gains eased after the government said that U.S. supplies climbed last week as output rose to a 17-year high.

“The jobless numbers gave the market another push higher,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The forced landing of the Syrian plane by Turkey opens a new front in the tensions between the countries, which is supportive for the market.”

Crude oil for November delivery rose 82 cents to settle at $92.07 a barrel on the New York Mercantile Exchange. Prices are up 7.3 percent from a year earlier.

Brent oil for November settlement increased $1.38, or 1.2 percent, to end the session at $115.71 a barrel on the London- based ICE Futures Europe exchange. The European benchmark grade reached a $23.64-a-barrel premium to West Texas Intermediate oil traded in New York, the highest level since Oct. 20, 2011.

Employment Picture

Applications for benefits dropped 30,000 in the week ended Oct. 6, the Labor Department said. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a department spokesman said as the data were issued to the press. The breakdown by state will show up in next week’s report.

The U.S. consumed 18.8 million barrels a day of oil in 2011, or 21 percent of the world’s total, according to BP Plc (BP/)’s Statistical Review of World Energy.

Turkish F-16 jets forced the airplane traveling from Moscow to Damascus to land after intelligence reports said it was carrying cargo banned by civil-aviation rules, Foreign Minister Ahmet Davutoglu said yesterday.

“It’s fear about what’s going on in the Middle East that’s keeping prices here,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in Chicago. “Anytime tension eases, the oil market gets whacked.”

There have been six days of artillery exchanges across the border between Turkey and Syria triggered by the deaths of five Turkish civilians when a mortar shell landed in a frontier village on Oct. 3.

Ceyhan Pipeline

About 1.2 million barrels of crude a day is shipped from the Turkish port of Ceyhan, according to consultants Petromatrix GmbH in Zug, Switzerland. Ceyhan is the export location for most of the oil pumped in northern Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, and for supplies from Azerbaijan.

The Kirkuk-Ceyhan line runs through Iraq and southern Turkey near the Syrian border.

“Oil traders don’t care much about Syria,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “What they do care about is the pipeline that runs from northern Iraq to Ceyhan. If that pipeline is in harm’s way, traders will be paying attention.”

The Middle East pumped 27.7 million barrels of oil a day last year, about 33 percent of world output, according to BP.

U.S. Stockpiles

Crude supplies rose 1.67 million barrels to 366.4 million barrels last week, the Energy Department said. The gain left stockpiles 8.5 percent higher than a year earlier. Inventories were forecast to increase 1.5 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey.

“The market is fundamentally oversupplied,” Horwitz said.

Output of crude rose 78,000 barrels a day to 6.6 million in the week ended Oct. 5, the most since May 1995, the report showed. Imports increased 115,000 barrels a day to 8.22 million.

Gasoline inventories fell 534,000 barrels to 195.4 million last week, the lowest level since October 2008, the department said. Stockpiles of distillate fuel, a category that includes heating oil and diesel, tumbled 3.18 million barrels to 120.9 million. Supplies dropped 6 percent over the last four weeks.

“We have a big drop in distillates and you are seeing distillates lead the market higher,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston.

Heating oil for November delivery rose 4.4 cents, or 1.4 percent, to $3.2571 a gallon in New York, the highest settlement since March 19.

The department published its report a day later than usual this week because of the Oct. 8 Columbus Day holiday.

Electronic trading volume on the Nymex was 569,739 contracts as of 3:48 p.m. Volume totaled 681,415 contracts yesterday, 30 percent above the three-month average. Open interest was 1.56 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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