Oil rises on positive U.S. data

Oil edged higher throughout the late European and early U.S. sessions as positive U.S. economic data boosted demand outlook for the worlds biggest oil consumer.

On the New York Mercantile Exchange, WTI crude for August delivery traded at $96.30 at 14:36 GMT, 0.84% higher on the day. Prices were green during the most of the day, ranging between daily high and low at $96.36 and $95.36 per barrel respectively. Light, sweet crude settled yesterday 0.37% higher after marking a 4.04% loss during last week.

Meanwhile, Brent oil August futures stood at $102.37 a barrel at 14:36 GMT, up 0.69% on the day. Prices remained higher than the previous close throughout the day, varying between daily high and low at $101.68 and $102.49 respectively. Brent settled 0.56% on the upside on Wednesday, following a steep 4.64% weekly drop last week. So far, the European benchmark has risen 1.3% for the past four days.

U.S. economic data that was published at 10:30 GMT supported oil prices, helping them extend daily gains. The Department of Labor said Initial Jobless Claims mismatched projections of a 10 000 decrease by 1 000. The number of people who filed for unemployment assistance in the U.S. last week fell to a seasonally adjusted 346 000, compared to the previous period’s 355 000 revised reading, but slightly above projections of 345 000. Personal Income for May surpassed expectations of 0.2% and surged to 0.5%, up from April’s revised 0.1% figure. Personal Spending for May met anticipations at 0.3%, well above the preceding month’s revised reading of -0.3%. Core PCE (Core Personal Consumption Expenditures) met projections both on monthly and annual basis. Core PCE for May stood at 0.1%, up from April’s 0.0% and was 1.1% higher than May 2012. Also, Pending Home Sales surpassed expectations and rose to 6.7% in May, up from Aprils revised reading of -0.5% and above the 1% increase forecast.

Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts said for Bloomberg: “The oil price is held up by expectations of a better economy and higher demand. As long as we have good economic data coming out, it’s hard for oil to go lower.”

Meanwhile, oil also received a boost by positive news from China, the world’s second biggest consumer that accounted for 11% of global consumption in 2012. After the country received another downward revision of its GDP forecast for 2013 by Goldman Sachs, down to 7.4% from 7.8%, the National Bureau of Statistics reported today Chinese industrial companies increased their profits by 15.5% in May, compared to the same period in 2012.

Oil prices are also supported by the ongoing conflicts in the Middle East. Iran’s newly elected president, Hassan Rohani, said the country will not shift its position on supporting Syria’s president Bashar al-Assad. Meanwhile, according to the Wall Street Journal, the CIA has begun moving weapons to Jordan using a network of secret warehouses. The U.S. is planning to arm Syrian opposition within a month.

Oils gains were capped as the upbeat economic news strengthened the dollar. Anticipation for an earlier deceleration of Feds monetary easing program kicked in again. The dollar index, which tracks the greenbacks performance against six major counterparts, traded at 83.32 at 14:31 GMT, up 0.13% on the day. The U.S. currency gauge fluctuated throughout the day between gains and losses as the euro pressured the greenback, which afterwards pushed back and advanced following the U.S. data at 10:30 GMT.