Oil ends up on U.S. jobless claims, weak dollar

By Gene Ramos

NEW YORK (BestGrowthStock) – Oil prices ended higher on Thursday, supported by positive U.S. jobless claims data and as the dollar weakened on rising worries about the extent of an expected U.S. Federal Reserve monetary easing.

All eyes remain on the U.S. Federal Reserve, which is expected to announce a second round of easing after its policy setting committee meets on November 2-3.

U.S. crude for December delivery settled up 24 cents at $82.18 a barrel, after dropping earlier to $81.50. It has gained in four of the last five sessions.

ICE December Brent crude ended up 43 cents at $83.59.

Prices ended below session highs, which were reached earlier as the dollar weakened, and as U.S. first time jobless benefit filings unexpectedly fell last week to a three-month low, a slight improvement in the depressed labor market.

U.S. equities eased as investors took to the sidelines, awaiting the results of the mid-term elections next week and ahead of the Fed’s expected quantitative easing. (.N: )

“The weekly claims number provided some support to crude oil but the ruminations over the election and the coming QE2 regime are acting as head winds,” said John Kilduff, partner at Again Capital LLC in New York.

“The market looks somewhat directionless until the election and the Federal reserve details next week are known,” Kilduff added.

Earlier, the oil market was also supported by Shell (RDSa.L: ) and Eni (ENI.MI: ) beating analyst forecasts with sharp gains in third-quarter profit (Read more your timing to make a profit.)s, helped by higher oil and gas prices.

DOLLAR DOWN, EYES ON QE2

The dollar (.DXY: ) fell as investors again reassessed how much money the Fed was likely to commit in a second round of economic stimulus.

At 3:27 p.m. EDT, the greenback was down 1.1 percent against a basket of currencies. A weaker dollar typically renders dollar-denominated commodities cheaper for non-dollar buyers, but can also signal a tempered growth outlook at the world’s largest oil consumer.

The negative correlation between the dollar and crude had reached its strongest in 14 months earlier this week.

Estimates of the length and amount of the Fed’s easing program varied widely, ranging from $250 billion to as high as $2 trillion in a Reuters survey of economists.

“It’s unlikely that QE alone is going to provide the necessary stimulus for a recovery in commodities. I think there needs to be a very firm underlying picture of economic health in the U.S. before we see any prolonged or sustained rally,” Paul Harris, a natural resource analyst at Bank of Ireland, said.

Another indicator on the pace of growth is due on Friday, when the United States is expected to show a 2 percent increase in third-quarter GDP growth, up from 1.7 percent in the prior quarter, due to higher consumer spending, a Reuters poll showed.

U.S. oil demand jumped last week resulting in a big 4.4 million-barrel drop in gasoline inventories, the Energy Information Administration reported on Wednesday.

Still, the overall bearish effect of the latest inventory data remained as crude stockpiles rose more than 5 million barrels.

Strike action at six French oil refineries ended, but oil shortages are likely to continue to bite as workers voted to continue protests at France’s two largest oil ports of Fos-Lavera and Le Havre.

(Additional reporting by Robert Gibbons in New York; Zaida Espana and Isabel Coles in London; Alejandro Barbajosa in Singapore; Editing by Sofina Mirza-Reid)

Oil ends up on U.S. jobless claims, weak dollar