Oil prices up on US data, Iran threat
February 04, 2012
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Oil prices rose on Friday after a government report showed the US economy in January created jobs at the fastest pace in nine months, fuelling hopes of stronger demand in the top petroleum-consuming nation.
Crude futures rose further on the jobs report, extending gains made after Iran's supreme leader warned of retaliation over "threats of oil embargo and war."
US crude futures, trying to break a string of five straight lower settlements, rose 94 cents to $97.30 a barrel, having traded from $96.01 to $97.47.
US crude must finish above $99.56 to avoid a weekly loss.Crude trading volumes were below 30-day averages, but by only 3 percent for Brent and 9 percent for US crude, during the noon hour in New York.
Brent/US crude spread slipped back closer to $16 a barrel after reaching $17.08 intraday on Friday, a few cents above its 200-day moving average.That was the biggest Brent premium to its US counterpart since the intraday high of $18.80 reached on November 9.
US nonfarm payrolls jumped by 243,000 in January, more than the expected gain of 150,000.
The US unemployment rate dropped to a near three-year low of 8.3 percent."The jobs number came much better than expected and gave the (crude) market a nice pop, but the question will be whether this is really a reflection of the entire economy," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
"We'll be watching to see if the rally in the Brent/WTI spread starts to top out, because the fundamentals in the EIA data (rising stockpiles, weak demand) are still there." US crude stockpiles have risen two consecutive weeks, according to Energy Information Administration data released Wednesday, and the latest increase in the week to January 27 was more than 4 million barrels as gasoline demand continues to trend below year-ago levels.Gasoline stockpiles also rose last week, up 3.02 million barrels, despite a drop in refinery utilisation and rise in refined products imports.
US stocks rose and the jobs report helped propel the Nasdaq index to an 11-year high and key industrial feedstock copper jumped more than 2 percent as the employment report sparked optimism about economic growth across markets.
Crude's strength came even as the dollar index initially strengthened on Friday and the US currency rallied against the yen and the euro.
A stronger dollar can pressure crude prices because it increases the cost of oil for consumers using other currencies.Helping limit the boost to oil prices from geopolitical and macro economic factors were persistent concerns about the ongoing negotiations between heavily indebted Greece and its creditors, along with the fears about the effect on the global economy if there is a messy default.
Copyright Reuters, 2012
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