West Texas Intermediate crude gained the most in a month as worse-than-expected jobs data reduced concern that the Federal Reserve will further pare bond buying.
Futures rallied from an eight-month low and trimmed a second weekly decline. Payrolls increased in December at the slowest pace since January 2011 and the unemployment rate dropped as more people left the labor force. Prices also went up China’s crude imports climbed to a record and on speculation that an $8.66 slide in the previous eight days was excessive.
“The Fed is probably not in any rush to tighten, and they’ll probably continue to have a very accommodative stand for quite some time,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “The China data showed that global oil demand is still strong. Crude had fallen $8 in the last few days and it’s just a little bit of a rebound.”
WTI for February delivery rose $1.06, or 1.2 percent, to settle at $92.72 a barrel on the New York Mercantile Exchange, the biggest one-day increase since Dec. 10. The volume of all contracts traded was 17 percent above the 100-day average at 3:32 p.m. Prices slid 1.3 percent this week.
Brent for February settlement advanced 86 cents, or 0.8 percent, to end the session at $107.25 a barrel on the London-based ICE Futures Europe exchange. Prices gained as the North Sea Buzzard field halted oil production for a second time this week. Volume was 29 percent above the 100-day average. The European benchmark was at a premium of $14.53 to WTI, compared with $14.73 yesterday.
The 74,000 gain in U.S. payrolls was smaller than the most pessimistic projection in a Bloomberg survey, Labor Department figures showed. The median forecast of 90 economists called for an increase of 197,000. The unemployment rate dropped to 6.7 percent, the lowest level since October 2008. The so-called participation rate decreased to 62.8 percent, matching October as the lowest since 1978.
“The jobs numbers indicate that the Fed’s money printing may continue, continuing to make commodities look attractive,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drop in the unemployment rate is a sign that more people are leaving the job market.”
The dollar weakened against the euro as the unemployment data reduced speculation that the Fed will further trim the bond buying it has used to support economic growth. A falling dollar increases crude’s investment appeal.
The dollar declined as much as 0.6 percent to $1.3687 per euro, reversing an earlier gain of 0.3 percent.
The Fed said Dec. 18 that it’s paring the monthly purchases to $75 billion a month from $85 billion. Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of the bond buying.
China’s crude imports exceeded exports by 26.69 million metric tons in December, according to data released on the website of the General Administration of Customs in Beijing today. The December net imports were the equivalent of 6.31 million barrels a day, 13 percent higher than the same month in 2012 and up 10 percent from November.
China is the biggest oil user after the U.S., consuming 10.2 million barrels a day in 2012, according to BP Plc’s Statistical Review of World Energy.
“The record imports of crude oil in China give some support to the market,” McGillian said. “The market is due for a rally given the retreat that we had. We are seeing a bit of technical correction in oil.”
Oil also gained as front-month contracts’ 14-day relative strength index slid to 30.2 yesterday, the lowest level in two months, according to data compiled by Bloomberg. Some investors buy contracts when the indicator is below 30, signaling a market is oversold. Today’s rally raised the reading to 36.2.
WTI capped a second weekly loss as weak demand boosted fuel inventories. Gasoline supplies rose to 227 million in the week ended Jan. 3, the highest level since March, the Energy Information Administration reported on Jan. 8. Total products supplied, a measure of consumption, tumbled 4.1 percent to the least in seven months, the EIA, the Energy Department’s statistical arm said.
Brent gained after a person with knowledge of the outage said production at the 200,000-barrel-a-day Buzzard field had stopped again today. Buzzard is the largest component in the Forties crude blend, which is one of four grades used to price global benchmark Dated Brent. The other grades are Ekofisk, Oseberg and Brent.
“The Buzzard outage would have supported Brent,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a consulting company in London.
Implied volatility for at-the-money WTI options expiring in March was 18.4 percent, down from 19 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 551,257 contracts at 3:32 p.m. It totaled 628,554 contracts yesterday, 19 percent above the three-month average. Open interest was 1.6 million contracts.
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