WTI Gains as U.S. Employment Data Discounted on Weather

West Texas Intermediate advanced for a fourth day on speculation that frigid winter weather weakened U.S. employment data.

Futures rose as much as 0.6 percent. The Labor Department said payrolls rose 113,000 in January, less than the 180,000 median of estimates in a Bloomberg survey of economists. Hiring decisions may have been affected by the coldest January in two decades. The Federal Reserve scrutinizes employment data to determine the timing and pace of cuts to bond purchases meant to boost the economy.

“The poor payroll data is being looked at as a weather-related anomaly,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The Fed looks at this data and could pull back on its tapering of stimulus as a result.”

WTI for March delivery rose 35 cents, or 0.4 percent, to $98.19 a barrel at 10:07 a.m. on the New York Mercantile Exchange. The volume of all futures traded was about 10 percent above the 100-day average. Futures touched $98.83 yesterday, the highest intraday price since Jan. 2. The contract is up 0.7 percent this week.

Brent for March settlement increased 56 cents, or 0.5 percent, to $107.75 a barrel on the ICE Futures Europe exchange. The volume of all futures traded was 4.6 percent below the 100-day average. The European benchmark crude traded at a $9.56 premium to WTI versus $9.35 yesterday.

Jobless Rate

The unemployment rate fell to 6.6 percent, the lowest level since October 2008, even as more Americans entered the labor force, department data showed. Retailers and government agencies cut payrolls by the most in more than a year, while construction firms and manufacturers boosted employment.

“The initial reaction was to move lower but the market quickly turned its back on the disappointing payrolls total,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The 6.6 unemployment rate is positive and a sign of underlying economic strength. The equity markets and other risk assets are already moving higher on it.”

Equities increased after the Labor Department released the report at 8:30 a.m. in Washington. The Standard & Poor’s 500 Index rose as much as 0.8 percent.

Coldest January

Last month was the coldest January since 1994 in the contiguous U.S. states, based on gas-weighted heating-degree days, according to Commodity Weather Group LLC.

“The weather in January was at least as bad as December, which would hurt hiring, so people are writing off the headline number,” Kilduff said.

The Fed said last week that it will press on with a second reduction to its monthly bond buying, by $10 billion to $65 billion, citing an improvement in the labor market.

In China, the HSBC Holdings Plc (HSBA) and Markit Economics’ services Purchasing Managers’ Index slid to 50.7 percent, the lowest since August 2011, a report today showed. The nation’s official Purchasing Managers’ Index fell to a six-month low of 50.5 in January as output and orders slowed, Feb. 1 data show. Numbers above 50 signal expansion. China is the second-biggest oil consuming country after the U.S.

WTI will probably decline next week as U.S. refineries shut plants for maintenance, reducing crude demand and bolstering stockpiles, a Bloomberg survey shows. Nineteen of 37 analysts, or 51 percent, forecast futures will decrease through Feb. 14. Ten respondents estimated prices will climb, and eight said there will be little change.

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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