Oil leaps above $86 on positive data

By Gene Ramos

NEW YORK (BestGrowthStock) – Oil prices shot up to a two-week high above $86 a barrel on Wednesday as positive data from the United States and China, the world’s top two oil consumers, lifted investor confidence about economic recovery.

Jobs in the U.S. private sector rose by the biggest margin in three years and manufacturing posted its 16th consecutive month of expansion, though the pace tapered off slightly in November.

In China, the official purchasing managers’ index (PMI), a gauge of factory activity, climbed to a seven-month high in November.

The upbeat economic data countered, for the moment, concerns about Europe’s sovereign debt problems and a U.S. government report showing a surprise increase in domestic crude inventories last week.

The day’s rally was led by U.S. gasoline futures, which surged nearly 5 percent, on reports of tight supplies in the U.S. East Coast and a snag at the 300,000 barrels-per-day refinery of Irving Oil Ltd in Saint John, New Brunswick, which delivers gasoline to the New York Harbor.

U.S. crude for January delivery gained $2.21, or 2.6 percent, to $86.32 a barrel by 12:35 p.m. EDT (1735 GMT) having surged to $86.47 earlier, the highest since November 12. It rebounded from a 2 percent slide on Tuesday.

ICE Brent crude rose $2.35, or 2.7 percent, to $88.27.

“From the depths of despair yesterday that resulted in a sell-off, there is a rash of positive economic data everywhere you look today, and that pulled prices up,” said Phil Flynn, an analyst at PFGBest Research in Chicago.

U.S. crude oil inventories rose 1.1 million barrels last week, the U.S. Energy Information Administration said, against the forecast for a 900,000 drawdown in a Reuters poll.

Crude initially rose earlier, guided by data released on Tuesday by the industry group American Petroleum Institute which showed crude stockpiles fell 1.1 million barrels last week.

Oil also gained as the U.S. dollar weakened against a basket of currencies (.DXY: ). Oil and dollar-denominated commodities often move inversely to the dollar.

The euro surged against the U.S. dollar after a U.S. official said the United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund.

(Additional reporting by Robert Gibbons in New York; By Alex Lawler in London; Alejandro Barbajosa in Singapore; editing by Sofina Mirza-Reid)

Oil leaps above $86 on positive data