US crude rises

US crude oil futures rose on Thursday, reversing early losses as a weaker dollar offset worries that lofty prices would erode demand. The dollar fell after US data showed an unexpected rise in jobless claims and an increase in producer prices in March. "When the (producer prices) and the weekly job claims number came out, we saw a reversal in the dollar and we saw a corresponding (rise) in oil prices," said Stephen Schork, editor of the Schork Report, in Villanova, Pennsylvania.
Futures were also boosted by news that Sunoco Inc shut a gasoline-making unit at its 335,000-barrels-per-day Philadelphia refinery after a small fire. On Wednesday, US data showed gasoline stockpiles plunged 7 million barrels last week, the biggest weekly drop in more than 12 years, raising concerns about supplies ahead of the summer driving season.
US crude for May delivery gained $1 to settle at $108.11 a barrel. Upward pressure came in part from options on the contract, in which concentrations of calls were at a level above current prices. In London, ICE May Brent crude expired, settling at $122.36 a barrel, down 52 cents.
Brent's premium to US crude narrowed to $14.25 from $15.77 at the close Wednesday. US crude volume hit 701,000 lots as of 3:13 pm EDT (1913 GMT), 3.5 percent above the 30-day average, with about two hours of the day's trading left. Brent crude volume was 398,000 lots, 17 percent below the 30-day average.
First-time claims for US unemployment benefits rose unexpectedly last week, raising questions about the health of a labour market recovery. Also, producer prices picked up pace in March as the disruption caused by Japan's earthquake began to be felt in the auto industry. The dollar fell against a basket of currencies after the data.
"The spike in jobless claims back over 400,000 hit the dollar, which once again is supporting energy and precious metal prices. It's a troubling data point from an area that we thought some progress was being made," said John Kilduff, a partner at Again Capital LLC in New York. Libyan rebels begged for more Nato air strikes, saying they faced a massacre from government artillery barrages on the besieged city of Misrata. But Nato allies rebuffed French and British calls to contribute more to the air war in Libya.
Libyan rebels have said they are exporting a minimal amount of crude from fields, pumping about 100,000 barrels per day, far less than usual production of 1.6 million bpd.
Elsewhere, the oil market had little reaction to news that inflation in China accelerated faster than expected in March. China's first-quarter GDP figures and March consumer price data are due Friday, and will be scrutinised for signs of out-of-control growth. That could prompt further monetary tightening and potentially affect oil demand, analysts said.