WTI Crude at Six-Week High on U.S. Jobless Claims; Brent Falls

Apr 17, 2014 3:50 pm ET

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April 17 (Bloomberg) -- West Texas Intermediate crude rose to a six-week high as a report showed fewer Americans than forecast filed applications for unemployment benefits.

Prices rose as jobless claims reached 304,000, the Labor Department said, below the 315,000 that was the median forecast of economists surveyed by Bloomberg. Brent fell as four-way talks on the crisis in Ukraine ended with an accord aimed at taking the first steps toward de-escalating the conflict.

“The jobless claims are supportive for the market,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The economy is getting better. The momentum is up for oil.”

WTI for May delivery rose 54 cents to settle $104.30 a barrel on the New York Mercantile Exchange, the second-highest closing price of 2014. The volume of all futures traded was 7.5 percent above the 100-day average. Prices advanced 0.5 percent this week to extend the 2014 gain to 6 percent. Nymex trading is closed tomorrow for Good Friday.

Brent for June settlement slid 7 cents to $109.53 a barrel on the London-based ICE Futures Europe exchange. Volume was 27 percent below the 100-day average. The European benchmark crude was at a premium of $6.16 to WTI for the same month.

U.S. Unemployment

Jobless claims increased by 2,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007, the report showed. The four-week average of claims, a less volatile measure than the weekly figure, dropped to 312,000, the lowest since October 2007, from 316,750 the week before.

“The strong U.S. economic data suggests stronger demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s a three-day weekend and there is a lot of geopolitical risk.”

Gasoline consumption averaged over four weeks increased to 8.83 million barrels a day in the week ended April 11, the highest level since January, the Energy Information Administration reported yesterday.

“We see a lot of upside potential in the oil market,” said Dan Heckman, a senior fixed-income strategist in Kansas City, Missouri, at U.S. Bank Wealth Management, which oversees $115 billion in assets. “It wouldn’t surprise me if prices rose another $10 to $15 in the next three to six months.”

Ukraine Crisis

Talks in Geneva today between Russian Foreign Minister Sergei Lavrov, his Ukrainian counterpart Andriy Deshchytsia, U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, went on for more than six hours, longer than scheduled.

The meeting “agreed on initial concrete steps to de- escalate tensions and restore security for all citizens,” the four said in a joint statement. Kerry said after the gathering that the talks amount to “good day’s work.”

The U.S. and its European allies have accused Russian President Vladimir Putin of stoking the unrest. They threatened to ratchet up sanctions on their former Cold War enemy if he doesn’t take steps to calm the situation and withdraw what NATO estimates are 40,000 Russian troops massed on Ukraine’s border.

Putin rejected accusations from Ukraine that he’d deployed troops there already and said he would fight to defend compatriots outside Russia.

‘Security Premium’

“There is concern that the Ukraine situation may deteriorate, possibly causing more security premium,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Economic news has been reasonably good recently.”

Implied volatility for at-the-money WTI options expiring in June was 16.7 percent, down from 17.3 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 474,875 contracts at 2:55 p.m. It totaled 748,831 contracts yesterday, 39 percent above the three-month average. Open interest was 1.66 million contracts.

--With assistance from Mark Shenk in New York.