WTI Climbs Closer to Brent as U.S. Jobless Claims Decline

West Texas Intermediate climbed, trimming Brent crude’s premium to a two-year low, as fewer Americans filed claims for unemployment benefits last week and consumer spending rebounded in May.

Prices gained for a fourth day as jobless claims decreased to 346,000 from a revised 355,000 the prior period, the Labor Department reported. Household purchases, which account for about 70 percent of the economy, rose 0.3 percent last month, the Commerce Department said.

“The oil price is held up by expectations of a better economy and higher demand,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “As long as we have good economic data coming out, it’s hard for oil to go lower.”

WTI for August delivery rose $1.55, or 1.6 percent, to $97.05 a barrel on the New York Mercantile Exchange, the highest settlement since June 19. The volume of all futures traded was 5.8 percent higher than the 100-day average for the time of day at 2:32 p.m. Futures are down 18 cents in the second quarter.

Brent for August settlement increased $1.16, or 1.1 percent, to end at $102.82 a barrel on the London-based ICE Futures Europe exchange. The volume traded was 29 percent below the 100-day average. Brent’s premium over WTI settled at $5.77, the narrowest level since Jan. 18, 2011.

Jobless Claims

The four-week moving average of jobless claims, a less volatile measure than the weekly figures, dropped to 345,750 last week from 348,500, according to the Labor Department.

The gains in consumer spending followed a 0.3 percent decline the prior month that was the biggest since September 2009, according to the Commerce Department.

U.S. consumer sentiment climbed last week to its highest level in more than five years. The Bloomberg Consumer Comfort Index increased to minus 28.3 in the period ended June 23, its highest level since January 2008.

More Americans signed contracts in May to buy previously owned homes than at any time in more than six years, a sign of bigger progress in the industry, figures from the National Association of Realtors showed.

“The U.S. data is quite good and it’s giving us some support,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s boosting oil-demand expectations.”

Total Demand

The U.S., the world’s biggest oil-consuming country, accounted for about a fifth of global demand last year, according to BP Plc (BP/)’s Statistical Review of World Energy.

“Demand has been improving,” said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. “At the same time supplies continue to rise.”

U.S. total petroleum demand increased 3 percent last week to 19 million barrels a day, the Energy Information Administration reported yesterday. Gasoline consumption climbed 0.6 percent to 8.89 million barrels a day, according to the EIA, the Energy Department’s statistical arm.

Refiners boosted operating rates to 90.2 percent, the highest level this year. Processing units are often restarted late in the spring, after being idled for maintenance in winter.

“You are going to see more of that,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “A lot of refineries are coming out of maintenance. We are back into the rally mode.”

Crude inventories gained for a third week to 394.1 million barrels in the U.S. on June 21, the EIA said.

Equities Advance

Oil also rose as U.S. equities advanced. The Standard & Poor’s 500 Index (COMFCOMF) increased for a third day, up as much as 1.1 percent to 1,620.07.

“If equities keep on climbing, that should keep oil up,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “We are locked in a $10 trading range from $90 to $100.”

The price has ranged from $90.11 to $99.01 for nine weeks. Brent has ranged from $98.76 to $106.67 in the same period.

“U.S. economic data was sufficiently upbeat to allow the S&P 500 to move higher, encouraging some risk-on trade flow,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York, in an e-mail.

Implied volatility for at-the-money WTI options expiring in August was 20.1 percent, down from 20.7 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 519,175 contracts as of 3:09 p.m. It totaled 595,014 contracts yesterday, 4.6 percent lower than the three-month average. Open interest was 1.81 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: Dan Stets at dstets@bloomberg.net

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