WTI Crude Climbs for a Third Day as U.S. Jobless Claims Decrease

Feb 06, 2014 3:51 pm ET

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Feb. 6 (Bloomberg) -- West Texas Intermediate crude advanced for a third day as applications for U.S. unemployment benefits fell for the first time in three weeks.

Prices climbed 0.5 percent. Jobless claims dropped by 20,000 to 331,000 last week, the Labor Department said. WTI also rose as the euro strengthened against the dollar after the European Central Bank refrained from announcing additional stimulus measures. Crude reduced gains on speculation milder weather will reduce consumption of heating oil.

“The jobless claims got the ball rolling,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “The ECB is a big factor. It’s a combination of the jobless number and the euro.”

WTI for March delivery rose 46 cents to settle at $97.84 a barrel on the New York Mercantile Exchange. The volume of all futures traded was near the 100-day average at 3:48 p.m.

Brent for March settlement gained 94 cents, or 0.9 percent, to $107.19 a barrel on the London-based ICE Futures Europe exchange. Volume of all futures traded was 2.5 percent above the 100-day average. The European crude was at a premium of $9.35 to WTI. The spread closed at $8.87 yesterday.

Last week’s jobless claims were smaller than the forecast of 335,000 in a Bloomberg survey.

Jobs Report

Monthly figures for January, which will be released by the Labor Department tomorrow, are projected to show a 180,000 increase in payrolls, according to separate survey. The unemployment rate probably held at 6.7 percent, the lowest level since October 2008.

“The drop in the jobless claims is pushing crude higher,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

U.S., the world’s biggest oil-consuming country, will use 18.9 million barrels a day this year, according to the Energy Information Administration.

“The weekly jobless number is good, and it’s a positive sign for the oil market,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “We are focused on the ECB and what it’s going to do. There seems to be some momentum across the commodity complex.”

The euro rose as much as 0.6 percent to $1.3619. A stronger euro and weaker dollar boost commodities’ investment appeal.

The Standard & Poor’s GSCI Index, a gauge of 24 commodities, increased as much as 1 percent. U.S. stocks advanced, with the S&P 500 Index up as much as 1.3 percent.

“The euro is strong and the equities are helping,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The economy is getting better.”

ECB Decision

ECB President Mario Draghi signaled officials will wait until next month before deciding whether to cut interest rates further. The central bank left them unchanged today.

The ECB remains “firmly determined to maintain the high degree of monetary accommodation and to take further decisive action if required,” Draghi said at a press conference today in Frankfurt.

WTI also advanced as stockpiles of distillate fuel dropped for a fourth week because of frigid temperatures in the U.S.

Prices pared gains on speculation that milder temperatures will weaken demand for heating oil and distillate inventories. Consumption of the fuel, which includes heating oil and diesel, fell last week for the first time since Jan. 3, the EIA, the Energy Department’s statistical arm, said yesterday.

Distillate Demand

“There’s a growing realization that as we move into the later part of the month, the weather will probably moderate and demand for distillate fuel will drop,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “Prices have been supported by the weather. The weather can only provide so much of a boost.”

Ultra low sulfur diesel futures for March delivery, a proxy for heating oil, slid 0.17 cent to $2.9951 a gallon on the Nymex. Volume of all futures traded was 6.2 percent above the 100-day average.

Implied volatility for at-the-money WTI options expiring in March was 18.1 percent, down from 20.3 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 471,946 contracts at 3:50 p.m. It totaled 514,958 contracts yesterday, 1.9 percent above the three-month average. Open interest was 1.57 million contracts.

--With assistance from Mark Shenk in New York. Editors: Margot Habiby, Richard Stubbe