Oil capped its longest rally this year as the number of Americans filing first-time unemployment claims unexpectedly declined and Greek political leaders struck a deal on a package of austerity measures.
Futures advanced 1.1 percent after the Labor Department said applications for jobless benefits decreased 15,000 in the week ended Feb. 4 to 358,000. The Greek government reached the agreement required for a 130 billion-euro ($173 billion) financing package, according to an e-mailed statement from Prime Minister Lucas Papademos’s office in Athens.
“The jobs data showed the U.S. economy is definitely looking better than it was, and it’s providing some strength to oil,” said Kyle Cooper, director of research for IAF Advisors in Houston. “Greece is probably the driving factor for the market’s rally.”
Crude for March delivery gained $1.13 to $99.84 a barrel on the New York Mercantile Exchange, the highest settlement in three weeks. Prices are up 1 percent this year. The three-day rally is the longest since a streak ended Dec. 27.
Brent oil for March settlement increased $1.39, or 1.2 percent, to end the session at $118.59 a barrel on the London-based ICE Futures Europe exchange. It was the highest settlement since July 22.
Economists forecast applications for unemployment benefits would rise to 370,000 in a Bloomberg News survey. They were 367,000 the prior week.
The four-week moving average, a less-volatile measure of claims, declined to 366,250, the lowest level since April 26, 2008, the Labor Department data showed. The U.S. unemployment rate fell to 8.3 percent in January, the department said Feb. 3.
An increase in workers typically boosts consumption of gasoline by commuters. Total fuel demand in the U.S. fell to 17.6 million barrels a day last week, the lowest level since 1999, the Energy Department reported yesterday.
The Organization of Petroleum Exporting Countries also cut its 2012 forecast for global oil use by 120,000 barrels a day to 88.76 million in its monthly market report today. The Energy Department trimmed its worldwide demand forecast for the year to 89.25 million barrels a day on Feb. 7 from 89.38 million in January.
“Hopefully the recovering jobs market will increase oil demand,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “A long-awaited deal in Greece is bullish for prices.”
The austerity agreement in Greece clears the way for a swap to cut the nation’s debt and win its second rescue in two years. European finance chiefs meeting in Brussels are set to defer a decision on the bailout, pressing the government in Athens to put the plan into action.
“It’s up to the Greek government by concrete actions -- through legislation, other actions -- to convince its European partners that the second program can be made to work,” Olli Rehn, the European Union’s economic and monetary affairs commissioner, said today as he arrived at the emergency meeting of euro-area finance ministers.
The 27 EU member states accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy.
The euro climbed to its highest level against the dollar since Dec. 12, boosting oil’s appeal as an investment alternative to the U.S. currency.
“The risk of falling down to deep recession is starting to decrease,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “The news about Greece together with more positive signs on the U.S. economy has boosted the outlook for oil demand.”
Oil may extend its rally as futures approach a “golden cross” formation when the 100-day moving average crosses the 200-day moving average on the daily technical chart, according to data compiled by Bloomberg.
The 100-day average, at $94.44 a barrel, is poised to rise above the 200-day, currently at $94.67 a barrel, for the first time since September. Investors tend to buy contracts when a shorter-term moving average rises above a longer-term one.
Oil volume in electronic trading on the Nymex was 556,716 contracts as of 2:46 p.m. in New York. Volume totaled 922,366 yesterday, 52 percent above the three-month average. Open interest was 1.47 million contracts.