West Texas Intermediate crude advanced to a three-month high on signs of stronger global economic growth and concern that political tension in Libya will disrupt supplies. Brent rose.
WTI gained for a second day. China’s exports rose more than analysts estimated in May, customs administration data showed yesterday. U.S. employment exceeded the pre-recession peak for the first time in May, the Labor Department said on June 6. Libya’s top court annulled the election of an Islamist-backed prime minister, deepening a political crisis in the North Africa oil producer two days before OPEC’s meeting in Vienna.
“Chinese exports and last Friday’s U.S. payroll numbers are providing some support to oil,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market still has its eyes on geopolitical risk. And when you throw in expectations that the global economy is improving, you are getting another round of the rally.”
WTI for July delivery gained $1.75, or 1.7 percent, to $104.41 a barrel on the New York Mercantile Exchange, the highest settlement since March 3. The volume of all futures traded was 23 percent above the 100-day average.
Brent for July settlement increased $1.38, or 1.3 percent, to end the day at $109.99 a barrel on the London-based ICE Futures Europe exchange. Volume was 36 percent above the 100-day average. The European benchmark crude traded at a premium of $5.58 to WTI, the narrowest since April.
China’s overseas shipments gained 7 percent last month from a year earlier, exceeding the 6.7 percent median forecast in a Bloomberg News survey. Imports fell 1.6 percent, leaving a $35.9 billion trade surplus, the biggest in five years, according to data compiled by Bloomberg.
U.S. payrolls expanded by 217,000 in May, the Labor Department said June 6. That marked the fourth consecutive monthly increase in employment of more than 200,000, the first time that’s happened since early 2000.
“People are coming back in after Friday’s number and reallocating money to oil,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “More people are starting to buy the idea that oil is a good asset here as long as the economy is growing.”
U.S. petroleum demand averaged 19.1 million barrels a day in the four weeks ended May 30, the most since February, according to the Energy Information Administration. Gasoline consumption averaged 9.2 million, the most since August.
Gasoline futures gained 1.6 percent on the Nymex to $2.9848 a gallon. It was the biggest gain in two months for both gasoline and oil.
“It’s a pretty outsized move,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “The market is obviously scared about something and it’s certainly pushing shorts out of the market.”
Oil also followed gains in U.S. stock markets. The Standard & Poor’s 500 Index extended a record as small caps rallied. The index rose as much as 0.3 percent to 1,955.55.
“The market is following equities on expectations that demand is going to be good,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
In Libya, the Supreme Constitutional Court in Tripoli said the election of Ahmed Maetig by parliament was unconstitutional, Al-Nabaa television reported. Several violations of the national charter were recorded during the vote, and evidence will soon be made public, the court said.
Libya has been mired in unrest in the three years since the overthrow of Muammar Qaddafi, with the chaos halting the recovery of crude output and the country divided into virtual fiefdoms controlled by armed groups with competing interests. Oil production dropped to 180,000 barrels a day in May, down from 1.35 million a year earlier, according to data compiled by Bloomberg.
The Organization of Petroleum Exporting Countries, which produces about 40 percent of the world’s oil, will meet in Vienna on June 11 to discuss its 30 million barrel daily production target. Ministers from Saudi Arabia, Angola and Kuwait said they expect no change, as did 22 of 23 analysts and traders surveyed by Bloomberg News.