West Texas Intermediate crude advanced for the first time in six days after claims for U.S. unemployment benefits unexpectedly dropped while the economy expanded at a faster pace last quarter.
Futures rose 0.4 percent following a Labor Department report that jobless claims fell by 5,000 to 305,000 last week. Gross domestic product grew at a 2.5 percent annualized rate, up from 1.1 percent in the first quarter. Iranian President Hassan Rouhani’s trip to the United Nations in New York raised hope for better relations with the U.S. Rouhani reiterated Iran’s right to nuclear research and spurned a U.S. initiative to arrange a handshake with President Barack Obama.
“The economic data today is positive and should improve perceptions for energy demand,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The Iranian president’s visit to the UN hasn’t panned out as well as anticipated or hoped.”
WTI crude for November delivery climbed 37 cents to settle at $103.03 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 39 percent below the 100-day average at 3:39 p.m. Prices are up 6.7 percent this quarter and 12 percent this year.
Brent oil for November settlement rose 89 cents, or 0.8 percent, to end the session at $109.21 a barrel on the London-based ICE Futures Europe exchange. Volume was 26 percent lower than the 100-day average. The European benchmark traded at a $6.18 premium to WTI at today’s close, the most since Sept. 5.
“We’ve been down very sharply for five days so a rebound shouldn’t be a surprise,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’ve erased much of the third-quarter gains.”
U.S. jobless claims were projected to increase to 325,000 last week, according to the median forecast of 49 economists surveyed by Bloomberg. Estimates for the Commerce Department report on GDP, the value of all goods and services produced, ranged from gains of 1.8 percent to 3.1 percent, based on forecasts from 79 economists surveyed by Bloomberg.
Equities also gained on the economic data, with the Standard & Poor’s 500 Index rebounding following its longest losing streak of the year. The S&P 500 and the Dow Jones Industrial Average each gained 0.1 percent at 2:50 p.m.
Federal Reserve Governor Jeremy Stein said in remarks prepared for a speech in Frankfurt that the Fed should more closely link the winding down of its $85 billion in monthly bond purchases to economic data such as the jobless rate. The Federal Open Market Committee refrained from reducing the pace of bond buying at its Sept. 17-18 policy meeting, choosing to “await more evidence that progress will be sustained.”
“The better-than-expected economic data cuts both ways though, because it opens the door for an announcement of tapering in October,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.
Rouhani condemned the killing of Jews in the Holocaust, a break with his predecessors. Elected on a pledge to ease Iran’s global isolation, he took over last month from Mahmoud Ahmadinejad, who repeatedly denied the reality of the World War II killings. The new leader has used this week’s trip to the UN to emphasize how he’s different and prepare the ground for renewed talks on the nation’s nuclear program.
The Iranian president said in his address Sept. 24 to the General Assembly that his country is ready to engage in “result-oriented” talks on the nuclear program while offering no concessions. He called Iran’s goals peaceful and said nuclear weapons have no place in his country’s doctrine.
Iran’s diplomatic efforts to end international sanctions may have only a limited impact on oil prices, Bank of America said. Even with diplomatic progress, a return of Iranian oil is only a “moderate” risk to the oil market, BofA Merrill Lynch said in an e-mailed report dated yesterday.
Rouhani’s “diplomatic push to end the embargo, if and when that happens, may end up having less than a $10-a-barrel impact on oil prices,” Francisco Blanch, BofA’s head of global commodity research in New York, said in the report.
WTI rose to a two-year high on Aug. 28 amid concern that a U.S.-led assault against Syria would lead to a disruption of Middle East oil exports. The region accounted for 35 percent of global oil output in the first quarter of this year, according to the International Energy Agency.
The U.S. and Russia reached a framework deal on Sept. 14 that averted a military strike to punish Syria for what the U.S. says was an Aug. 21 chemical attack by government forces. The UN Security Council’s five permanent members have agreed on the most important elements of a draft resolution requiring Syria to surrender chemical arms, according to a UN diplomat, who asked not to be identified because the negotiations are confidential.
Implied volatility for at-the-money WTI options expiring in November was 20.3 percent, down from 21.1 yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 340,168 contracts as of 3:39 p.m. It totaled 511,019 contracts yesterday, 18 percent below the three-month average. Open interest was 1.88 million contracts.