West Texas Intermediate crude rose after U.S. employers added more jobs than planned, signaling climbing fuel demand, while Brent oil fell to the lowest level of 2013 on increasing flows in a North Sea pipeline.
Futures capped the biggest weekly gain in a month as the Labor Department said that the jobless rate fell to a five-year low of 7.7 percent in February. The Brent Pipeline System is “approaching” its targeted flow rate of 80,000 barrels a day, an official for Abu Dhabi National Energy Co., or Taqa, said by phone. A leak shut the link shut for five days on March 2. WTI fell earlier as the dollar reached a 2013 high against the euro. WTI open interest rose to a record for a fifth time yesterday.
“The employment data bodes extremely well for both the overall economy and fuel demand,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The rally of the dollar is going to cap gains in dollar-denominated commodities like crude.”
Crude oil for April delivery gained 39 cents, or 0.4 percent, to settle at $91.95 a barrel on the New York Mercantile Exchange. Prices advanced 1.4 percent this week, the most since the five days ended Feb. 1. The volume of all futures traded was 4 percent below the 100-day average at 3:15 p.m. Open interest was a record 1.72 million contracts yesterday.
Brent oil for April settlement decreased 30 cents, or 0.3 percent, to end the session at $110.85 on the London-based ICE Futures Europe exchange. Prices gained 0.4 percent this week. The volume of all futures traded was 82 percent above the 100-day average.
The European benchmark grade’s premium shrank to $18.90 above WTI futures, the narrowest level since Jan. 31. The spread was $19.59 yesterday.
U.S. employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped from 7.9 percent.
The better-than-expected jobs data helped the Dow Jones Industrial Average extend a record high. The Dow rose as much as 0.6 percent to 14,413.17.
“The oil market is balancing two significant factors,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “The U.S. economy is improving, which should be bullish for demand. On the flip side, the fundamentals of the market are very weak.”
U.S. oil inventories rose 3.83 million barrels last week to 381.4 million, the most since June 29, the Energy Information Administration, the Energy Department’s statistical arm, reported on March 6.
WTI also gained as gasoline futures for April delivery jumped 2.6 percent to $3.2035 a gallon on the Nymex, the highest settlement level since Sept. 28.
Taqa said yesterday that the Brent pipeline had resumed. The company can’t yet say when the targeted flow-rate of 80,000 barrels a day will be reached.
“The impact of the Brent pipeline on prices shows that it’s not just WTI that can move independently of the overall market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It’s now Brent that’s moving on anomalous events.”
The dollar climbed against major currencies, curbing the appeal of raw materials denominated in the U.S. currency as an investment. The dollar rose as much as 1.2 percent against the euro to $1.2955.
“The dollar is strengthening with the unemployment number that came out this morning,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.
Implied volatility for at-the-money WTI crude options expiring in May fell for a fourth day to 18.82 percent at 3:15 p.m. in New York from 19.54 percent yesterday.
Electronic trading volume on the Nymex was 450,043 contracts as of 3:15 p.m. It totaled 681,799 contracts yesterday, 26 percent above the three-month average.