West Texas Intermediate rose to the highest level in two weeks as the number of Americans filing applications for jobless benefits dropped last week. Brent’s premium to WTI widened for the first time in seven days.
WTI gained 0.6 percent after the Labor Department said first-time unemployment claims fell by 10,000 to 332,000 last week. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. Futures dropped earlier after an Energy Information Administration report yesterday showed U.S. crude supplies rose to the highest level for the time of year in records dating to 1982.
“These numbers suggest that the labor market is starting to improve, signaling the economic recovery will accelerate,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “An improving jobs picture will boost energy demand. More miles will be driven because of increased commuting and more things will be bought, which will need to be transported.”
Crude oil for April delivery rose 51 cents to $93.03 a barrel on the New York Mercantile Exchange. It was the highest settlement since Feb. 25. The volume of all futures traded was 21 percent below the 100-day average at 3:17 p.m. Futures are up 1.3 percent this year.
Brent oil for April settlement, which expired today, climbed 90 cents, or 0.8 percent, to end the session at $109.42 a barrel on the London-based ICE Futures Europe exchange. It closed at $108.52 yesterday, the lowest settlement since Dec. 17. The more-active May contract rose 72 cents, or 0.7 percent, to $108.96. The volume of all futures was 40 percent above the 100-day average.
The European benchmark is rebounding after failing to break through technical support at $108.44, said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. That’s the 50 percent Fibonacci retracement from the high of $128.40 on March 1, 2012, to the low of $88.49 touched in June.
“If the new contract can decisively break through $108.44 a barrel during the next few days,you will see prices move strongly to the downside,” Schork said.
The Bloomberg Consumer Comfort Index advanced to the highest level since April. The comfort index’s measure of personal finances climbed to the highest reading since July.
Equities also advanced on the improving economic outlook. The Dow Jones Industrial Average climbed as much as 0.5 percent to an all-time high of 14,528.79. The Standard & Poor’s 500 Index gained as much as 0.5 percent to 1,562.14, approaching a record high.
“The strong jobs number is giving the market support,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The numbers are boosting equities, which should give us more strength.”
WTI’s discount to Brent shrank to a six-week low yesterday after the EIA reported that crude supplies at Cushing, Oklahoma, the delivery point for Nymex futures, dropped 1.53 million barrels last week, the biggest decline since May 2011, to 49.3 million. Brent’s premium to WTI futures widened to $16.39 from $16 yesterday.
“The spread absolutely collapsed,” Schork said. “It’s about time for it to widen again. It was a real widow maker.”
The differential will average $7.50 a barrel this year as U.S. refineries end maintenance and new pipeline capacity reduces a glut at Cushing, Goldman Sachs Group Inc. said in a March 11 report.
U.S. crude stockpiles climbed 2.62 million barrels to 384 million last week, according to the EIA, the Energy Department’s statistical arm. Crude output rose 66,000 barrels to 7.16 million a day, the highest level since July 1992.
OPEC’s production may rise in the second quarter to meet increasing demand from refiners, indicating prices will advance as spare production capacity is reduced, Morgan Stanley said. Output by the 12-member group could grow by 850,000 barrels a day from April to June, the bank said in the report today.
The Organization of Petroleum Exporting Countries will increase its shipments this month, tanker tracker Oil Movements said. OPEC will export 23.75 million barrels a day in the four weeks to March 30, up 300,000 barrels from the previous period, the Halifax, England-based researcher said today in an e-mailed report. The figures exclude Angola and Ecuador.
Electronic trading volume on the Nymex was 370,176 contracts as of 3:19 p.m. It totaled 723,353 contracts yesterday, 33 percent above the three-month average. Open interest was 1.71 million contracts.