WTI Oil Gains a Second Day as Payrolls Increase; Brent Advances

Apr 04, 2014 3:12 pm ET

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April 4 (Bloomberg) -- West Texas Intermediate and Brent crudes rose for a second day after U.S. employers increased payrolls in March, signaling fuel consumption may climb in the world’s biggest oil-consuming country.

Futures advanced 0.8 percent in New York, trimming a weekly decline. Payrolls grew 192,000 after a 197,000 gain in February that was larger than first estimated, Labor Department data showed today. The unemployment rate held at 6.7 percent. Brent also rallied as rebels continued to block exports from Libya’s east as traders await a possible resumption.

“This data shows that the U.S. economy is doing better, which bodes well for oil demand,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re all keeping an eye on developments in Libya. If there’s a resolution and the oil starts to move, we could turn around and test the recent lows.”

WTI for May delivery increased 85 cents to settle at $101.14 a barrel on the New York Mercantile Exchange. Prices slipped 0.5 percent this week. The volume of all futures traded was 9.1 percent below the 100-day average at 3:11 p.m.

Brent for May settlement rose 57 cents, or 0.5 percent, to end the session at $106.72 a barrel on the London-based ICE Futures Europe exchange. The contract fell 1.2 percent this week. Volume was 11 percent higher than the 100-day average. The European benchmark closed at a $5.58 premium to WTI.

Jobs Report

Revisions to prior jobs reports added a total of 37,000 to payrolls in the previous two months. The median forecast in a Bloomberg survey projected a 200,000 gain. Private employment, which excludes government jobs, surpassed the pre-recession peak for the first time.

“There was positive momentum in the market before the jobs number and investors saw no reason to turn lower when they saw the actual numbers,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The headline number was a bit smaller than expected, but the revisions to the prior month’s data balanced that out.”

The Federal Reserve uses the jobs report to help determine the timing and pace of further cuts to its monthly bond-buying program. The central bank also looks to the unemployment rate as a factor in deciding when to raise its benchmark interest rate.

European Central Bank President Mario Draghi said yesterday that policy makers could turn to asset purchases to combat persistent low inflation in the 18-nation euro zone.

‘Important Thing’

“The most important thing of the day” for the oil market is the U.S. employment data, Hans van Cleef, an energy economist at ABN Amro Bank NV, said by phone from Amsterdam. “The U.S. economy is still doing much better than Europe.”

Rebels in Libya’s east indicated that four terminals could be reopened in 24 to 48 hours, Sliman Qajam, a member of the government’s energy committee, said in Tripoli yesterday. The country pumped 250,000 barrels a day last month, down from 1.4 million a year earlier because of unrest, a Bloomberg survey of analysts and producers shows.

An attempt by the rebels to sell crude independently of the government failed last month as the U.S. Navy intercepted the tanker Morning Glory, which they had loaded in Es Sider, one of the ports they control. The ship arrived at Libya’s Zawiya harbor, al-Nabaa television reports.

WTI may drop next week amid speculation that U.S. crude stockpiles will increase, a Bloomberg survey shows. Eighteen of 28 analysts and traders, or 64 percent, predict futures will fall through April 11 while six respondents forecast a price gain and four see little change.

--With assistance from Grant Smith in London.