Oil rises a second day as jobs data eases concerns

By Gene Ramos

NEW YORK (BestGrowthStock) – Oil advanced for a second day on Thursday after a modest improvement in U.S. jobs data eased some concerns about the economy.

The Labor Department reported that first-time filings for U.S. claims for unemployment benefits fell more than expected last week, though the four-week filings average rose to the highest level since late November.

Benchmark U.S. crude futures for October settled at $73.36 per barrel, up 84 cents, or 1.16 percent, getting an additional boost from a weaker dollar. October crude touched a session high of $73.98, up $1.46.

The rally began on Wednesday, when crude closed up more than 1 percent, rebounding after sinking early to the lowest level since early June on data showing U.S. crude and product supplies rose last week to post a new high. (EIA/S: )

Crude futures volume on Thursday was heavy, at more than 700,000 lots, and the market stayed in positive territory for the day, unlike Wall Street, where the stock market slumped as early gains on the jobless claims data fizzled. (.N: )

Later month contracts traded up even stronger, in reaction to bloated inventories, analysts said. This widened the contango, in which prompt futures trade at a discount to later months.

“The contango is widening and that is a logical reaction to inventories building up so much as it is more economical to store,” said Dominick Chirichella, senior partner at Energy Management Institute in New York.

Analysts said further support for the widening contango, came from the looming autumn refinery maintenance season, when crude demand typically ebbs before picking up for the winter.

ICE Brent ended up $1.54, or 2.1 percent, at $75.02, also rising for a second day. Brent’s premium against the U.S. benchmark crude went as high as $1.80, the highest since June 3. This reflects better-balanced Brent supplies than those in the U.S., according to analysts. (Graphic: http://link.reuters.com/nuj57n )

Support for oil futures came early as the dollar (.DXY: ) fell against a basket of currencies. A weaker dollar often supports commodities priced in the U.S. currency.

“The dollar’s weakness is lending support to crude futures today and gains reflect a follow-through from the breakout from 11-week lows yesterday,” said Tom Knight, trader at Truman Arnold, in Texarkana, Texas.

“This is a technical bounce after recent weakness (and) an improved cash market in the Gulf Coast, due to some refinery turnarounds, is also helping in this relief rally,” he added.

Front-month U.S. crude futures’ 14-day relative strength index (RSI) fell to just 30 on Tuesday, a technical pointer to oversold conditions, but has since bounced to around 40, Reuters data show, partly on profit-taking from short positions. (Graphic: http://link.reuters.com/fuc57n )

However, oil’s two-day gains “has all the hallmarks of an upside correction or retracement in an otherwise falling market,” brokers at PVM Oil Associates in London said.

Investors await a gathering of central bankers from around the world on Thursday at the Jackson Hole, Wyoming, mountain resort to assess the darkening economic outlook.

In a speech on Friday, U.S. Federal Reserve Chairman Ben Bernanke is likely to discuss the uncertain prospects for the economy, but isn’t expected to give many clues about whether the central bank will pump more cash into the economy to keep the recovery going.

Also being awaited, the U.S. government on Friday is expected to revise second-quarter gross domestic product growth lower to an annual pace of 1.4 percent, from 2.4 percent, according to a Reuters survey.

The U.S. Energy Information Administration on Wednesday said that U.S. crude and product inventories all rose last week. In total, commercial crude and product stocks rose to 1.139 billion barrels, topping the record weekly high of 1.13 billion barrels set in the week to August 13. (EIA/S: )

(Additional reporting by Robert Gibbons in New York; Christopher Johnson in London; Alejandro Barbajosa in Singapore; Editing by David Gregorio)

Oil rises a second day as jobs data eases concerns