Oil rises for first time in 6 days on decline in US unemployment rate
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Oil gained for the first time in six days, paring a weekly decline, after the U.S. jobless rate fell to the lowest level in three years.
Futures climbed 1.5 percent after the Labor Department said the unemployment rate dropped to 8.3 percent in January, the least since February 2009. Nonfarm payrolls increased 243,000, the most since April. Oil dropped this week as inventories rose and demand weakened.
Crude for March delivery gained $1.48 to settle at $97.84 a barrel on the New York Mercantile Exchange. Prices fell 1.7 percent this week.
Brent oil for March settlement climbed $2.51, or 2.2 percent, to $114.58 a barrel on the ICE Futures Europe exchange. Brent’s premium to Nymex’s West Texas Intermediate widened for a seventh day, to $16.74.
The unemployment rate, derived from a survey of households, was forecast to hold at 8.5 percent, according to the median projection in a Bloomberg News survey of economists.
January’s payroll increase exceeded all the forecasts in the survey. The median projection called for an increase of 140,000. Estimates by the 89 respondents ranged from gains of 95,000 to 225,000.
Markets Exploded The jump in employment was broad-based, including manufacturing, construction, temporary help agencies, restaurants and retailers.
Crude also moved higher after a Washington Post columnist reported yesterday that U.S. Defense Secretary Leon Panetta believes there is a strong likelihood that Israel will strike Iran by the end of June. Panetta declined to comment.
“The market found support overnight on the headlines that pointed to the possibility Israel will attack Iran this spring," said Bentz. Iran has said it may close the Strait of Hormuz, the transit point for about a fifth of global crude, after the European Union announced Jan. 23 that it will implement an oil embargo starting July 1 to pressure the Islamic republic over its nuclear program.
Iran’s Supreme Leader Ayatollah Ali Khamenei said his country will carry out its threats in response to Western sanctions aimed at stopped its nuclear program if needed, the state-run Mehr news agency reported on Saturday.
Rising Inventories
Nymex futures fell for the previous five days on signs of surging supply. Total inventories climbed to a 13-week high of 338.9 million barrels, and stockpiles at the Cushing (DOESCROK), Oklahoma, delivery point for the New York contract reached a six-week high of 30.1 million. The current oil inventory level can support 23.4 days of refinery use, the most since July 1, according to the Energy Department.
Brent Premium Crude prices may fall next week, a Bloomberg News survey showed. Fourteen of 34 analysts, or 41 percent, forecast oil will drop through Feb. 10. Twelve respondents, or 35 percent, predicted prices will increase and eight estimated there will be little change.
Total petroleum demand in the US, the biggest oil consumer, fell to 17.7 million barrels a day last week, the lowest level since May 1999, according to the Energy Department. Gasoline consumption decreased to 7.97 million barrels a day, the lowest level since September 2001.
Oil volume in electronic trading on the Nymex was 655,737 contracts as of 3:11 p.m. in New York. Volume totaled 745,272 yesterday, 27 percent above the three-month average. Open interest was 1.44 million contracts, a three-month high.