Oil Falls for First Time in Four Days on Jobless Claims

Oil fell for the first time in four days as claims for U.S. unemployment benefits increased more than forecast, reducing optimism that a growing economy will boost fuel demand.

Prices trimmed the biggest monthly gain since August after initial jobless claims rose to 368,000 last week, exceeding the median forecast of economists surveyed by Bloomberg, and as a U.S. consumer comfort index slipped for a fourth week. Oil settled at a four-month high yesterday on speculation that stronger economic growth would boost demand.

“Sentiment is a little bit ahead of what the data is actually bearing out,” said Jacob Correll, a Louisville, Kentucky-based analyst at Summit Energy Inc., which manages more than $20 billion in companies’ annual energy spending. “It’s tough to sustain the upward move until we start seeing better, concrete data.”

West Texas Intermediate for March delivery slid 45 cents, or 0.5 percent, to settle at $97.49 a barrel on the New York Mercantile Exchange. Futures rose to $97.94 yesterday, the highest close since Sept. 14. Prices gained 6.2 percent in January, a third monthly increase. Trading was 30 percent above the 100-day average for the time of day at 3:03 p.m.

Brent for March settlement rose 65 cents, or 0.6 percent, to $115.55 a barrel on the London-based ICE Futures Europe exchange. Trading was 0.2 percent below the 100-day average. The futures advanced 4 percent in January.

Seaway Pipeline

Brent’s premium to WTI widened to $18.06 from yesterday’s $16.96, closing above $18 for the first time since Jan. 10. The spread grew after Enterprise Product Partners LP said the Seaway pipeline, which ships oil from Cushing, Oklahoma, the delivery point for WTI futures, to the Gulf Coast, will have limitations at its terminus in Texas until a new pipeline lateral is finished in late 2013.

WTI’s drop came after the relative-strength index of front-month futures rose to 74.5 yesterday. RSI readings above 70 suggest prices will decrease, while figures below 30 can be buy signals. The index was above 70 today.

This month’s rally of oil prices “seems to be predicated more on expectations of economic growth in the future and every time we get a bit of cold water on that idea, the market has a tendency to experience some profit taking,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “That’s what we are having today.”

Jobless Claims

The jobless claims rose 38,000 in the week ended Jan. 26, the most since Nov. 10, the Labor Department said. The number of people who continue to collect jobless benefits climbed by 22,000 to 3.2 million in the week ended Jan. 19.

The Labor Department, scheduled to release payroll data tomorrow, may report a 165,000 increase in January employment, according to a Bloomberg survey. The jobless rate held at 7.8 percent, the survey showed.

U.S. consumer comfort declined as Americans’ outlook on spending soured. The Bloomberg Consumer Comfort Index dropped to minus 37.5 in the period ended Jan. 27, the lowest reading since October, from minus 36.4 in the prior week. The measure’s buying-climate gauge decreased to a four-month low.

The Federal Open Market Committee said in a statement yesterday that economic growth, while slowed by “transitory factors,” faces risks even after strains in global financial markets have eased.

“There’s been a lot of enthusiasm about the economy but now people are having second thoughts, at least for today,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “That’s pushing the price down a bit.”

Oil Supply

U.S. crude inventories increased 5.95 million barrels in the week ended Jan. 25 to 369.1 million, the Energy Information Administration, the Energy Department’s statistics arm, reported yesterday. Analysts surveyed by Bloomberg expected a gain of 2.5 million.

“There is still a lot of fundamental weakness in oil,” Correll said. “You see the big stock build in the U.S., and demand is still pretty low.”

Total petroleum demand fell 0.3 percent to 18.3 million barrels a day in the four weeks ended Jan. 25, the lowest level since the week ended March 30, the EIA reported. The U.S is the world’s biggest oil-consuming country.

Electronic trading volume on the Nymex was 586,624 contracts as of 3:04 p.m. It totaled 501,214 contracts yesterday, almost matching the three-month average of 501,287. Open interest was 1.57 million.

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