West Texas Intermediate oil advanced after U.S. unemployment benefit applications dropped to a six-week low, bolstering optimism about the country’s economy, and the dollar weakened against the euro.
Futures climbed 1.3 percent in New York as first-time jobless claims unexpectedly fell last week. A report tomorrow may show payrolls grew in February. The dollar declined against the euro after the European Central Bank held its benchmark interest rate steady, making assets priced in the U.S. currency more attractive to investors. A North Sea pipeline resumed operations after a five-day shutdown, weighing on Brent.
“The better-than-expected jobs numbers are giving the market a boost today,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Crude oil for April delivery rose $1.13 to settle at $91.56 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 26 percent above the 100-day average at 3:10 p.m. The contract dropped to $90.12 on March 4, the lowest settlement this year, and climbed to $97.94 on Jan. 30, the highest close since Sept. 14.
Brent oil for April settlement rose 9 cents to end the session at $111.15 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 44 percent higher than the 100-day average. The European benchmark traded at a $19.59 premium to WTI, down from $20.63 yesterday.
“WTI climbed strongly for the first five or six weeks of the year, then gave it all back in two weeks,” said Stephen Schork, the president of Schork Group Inc. in Villanova, Pennsylvania. “There was no traction to the downside below $90 a barrel, and $100 is too high to justify. In the short term, we should head for the upper end of the $90-to-$95 range.”
The number of Americans who filed for unemployment benefits fell by 7,000 to 340,000 in the week ended March 2, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. A report tomorrow may show that payrolls rose by 163,000 last month, a Bloomberg survey showed.
The better-than-expected jobs data helped send the Dow Jones Industrial Average to a third straight record. The Dow rose as much as 0.4 percent to 14,354.69. The Standard & Poor’s 500 Index gained 0.2 percent.
The dollar retreated as much as 1.2 percent against the euro to $1.3119 as the ECB kept interest rates on hold and its President Mario Draghi said data suggests the economy will stabilize this year.
“Some of the economic data has been looking better, which is good for fuel demand,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “Some people were looking for the ECB to cut rates but that didn’t happen and Draghi doesn’t seem too concerned about the euro-zone outlook.”
Brent futures lagged. The North Sea pipeline is flowing at less than full capacity, a spokesman for operator Abu Dhabi National Energy Co. PJSC, known as Taqa, said by telephone from Abu Dhabi, capital of the United Arab Emirates.
Production from the 27 North Sea fields that make up the Brent system was shut March 2 after Taqa reported a leak in one leg of the Cormorant Alpha platform. The pipeline has the capacity to carry 90,000 barrels a day of oil and 10,000 barrels a day was already offline after an incident on Jan. 14.
The company didn’t specify when operations resumed at the pipeline nor did it say when the network would reach the targeted flow of 80,000 barrels a day.
Weakness in U.S. oil demand may be overstated because of disruptions at pipelines and terminals from Hurricane Sandy in October that have made it difficult for refiners to ship products, Stefan Wieler, a London-based analyst at Goldman Sachs Group Inc., said in a report yesterday.
The death of Venezuelan President Hugo Chavez on March 5 should have a limited impact on the country’s oil production in the short term, while new leadership may foster longer-term investment and boost output, the bank said.
U.S. crude supplies climbed 3.83 million barrels to 381.4 million last week, leaving stockpiles at the highest level since June, the Energy Information Administration said yesterday. Refinery utilization dropped to 82.2 percent of capacity, the least since March 16, 2012, according to the EIA, the Energy Department’s statistical arm.
“WTI is the flavor of the day despite the highly visible abundance of oil in the U.S.,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Refineries are running at very low rates, so supplies should climb further, which makes the rally in WTI vulnerable.”
Electronic trading volume on the Nymex was 582,641 contracts as of 3:09 p.m. It totaled 541,813 contracts yesterday, 0.7 percent above the three-month average. Open interest was a record 1.71 million contracts.