WTI Crude Rebounds on U.S. Jobless Claims

West Texas Intermediate crude rebounded after the biggest drop in two months as fewer Americans than projected filed applications for unemployment benefits last week. Brent advanced.

Prices rose for the first time in three days, following gains in U.S. equities. Jobless claims declined to the least since November, the Labor Department said. Crude also climbed as the euro strengthened to a two-month high against the dollar. Brent increased as President Barack Obama said the U.S. and its allies will keep raising pressure on Russia to back down in Ukraine. WTI dropped as much as 1.3 percent earlier on concern that weaker demand is boosting U.S. inventories.

“The jobless report is driving up the stock market and oil,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “A weak dollar makes for a stronger market. I don’t see oil going below $100. The Ukraine crisis is not over yet.”

WTI for April delivery rose 11 cents to settle at $101.56 a barrel on the New York Mercantile Exchange. The volume of all futures traded was about 42 percent more than the 100-day average. Prices dropped 1.8 percent yesterday, the most since Jan. 2.

Brent for April settlement climbed 34 cents, or 0.3 percent, to $108.10 a barrel on the London-based ICE Futures Europe exchange. Volume was 33 percent above the 100-day average. The European benchmark crude was at a premium of $6.54 to WTI. The spread ended yesterday’s session at $6.31.

Jobless Claims

Applications for unemployment benefits decreased 26,000 last week to 323,000, fewer than any economist forecast in a Bloomberg survey. The four-week average, a less-volatile measure than the weekly figure, was 336,500 from 338,500 in the prior period.

The Standard & Poor’s 500 Index climbed as much as 0.4 percent to a record 1,881.94.

The U.S., the world’s biggest oil-consuming country, will use 18.9 million barrels a day of oil this year, according to the Energy Information Administration.

“The U.S. economic data is generally good and it helps the oil market,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

The euro jumped as much as 0.9 percent to $1.3857, the highest level since Dec. 27, as European Central Bank President Mario Draghi said inflation is expected to rise gradually. A stronger euro and weaker dollar increase oil’s investment appeal.

Ukraine Conflict

Speaking at the White House today, Obama held open the possibility of further sanctions if Vladimir Putin’s government doesn’t respond. His administration restricted visas for Ukrainian officials and others, including Russians, who it says are threatening Ukraine’s sovereignty. He also authorized financial sanctions, leaving the imposition of any restrictions until later.

Voters in Crimea will decide on March 16 whether the Black Sea peninsula will join Russia or stay with Ukraine after local lawmakers opted to return the region back to Russia at an emergency meeting.

Russia produced 9.9 million barrels a day of crude in 2012 and exported about 5 million, according to the Energy Information Administration, the Energy Department’s statistical arm.

“There are still issues with Ukraine and still reasons to be bullish on Brent,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.

Crude Supplies

Crude stockpiles have climbed 13.6 million barrels since Jan. 10 and demand averaged over four weeks slid to an eight-month low, the EIA said yesterday. Refiners cut processing as they transition to summer from winter fuels.

“We are getting into the weak-demand season that’s going to allow crude-oil inventories to continue to build up,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “You are seeing a lack of demand from refiners and from the consuming public.”

Investors withdrew a net $39.8 million yesterday from U.S.- listed exchange-traded funds that invest in energy, equivalent to 1.1 percent of total assets, data compiled by Bloomberg show.

Implied volatility for at-the-money WTI options expiring in April was 19.1 percent, up from 18.1 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 648,976 contracts at 3:47 p.m. It totaled 636,967 contracts yesterday, 28 percent above the three-month average. Open interest was 1.7 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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