WTI futures hit 2-month high on bullish US jobless claims, inventories data in focus

West Texas Intermediate jumped to the highest in more than two months and Brent held ground near the $112 mark after the US Labor Department reported that fewer people filed for initial unemployment benefits in the week ended December 21, boosting demand prospects in the worlds top consumer. Supply outages in Libya and South Sudan continued to underpin the market. Strikes at refineries in France kept gasoline prices supported, but limited demand for crude. Market players also awaited the release of EIAs weekly US crude inventories statistics due on Friday, after the American Petroleum Institute reported an unexpected rise in stockpiles last week.

On the New York Mercantile Exchange, WTI crude for delivery in February traded at $99.37 per barrel at 16:01 GMT, up 0.15% on the day. Prices surged to a two-month high of $99.51 a barrel shortly after the jobless data, while session low was hit at $99.06 a barrel. The US benchmark rose by nearly 0.6% on Tuesday and extended its weekly advance to over 0.2% on Thursday.

Meanwhile on the ICE, Brent futures for settlement in the same month were down 0.06% by 16:02 GMT to trade at $111.84 a barrel. Prices held in a range between days high and low of $112.01 and $111.47 a barrel. The European benchmark added 0.4% on Tuesday but trimmed its weekly advance to less than 0.1% following Thursdays decline. Brents premium to its US counterpart was at $12.68, based on latest closing prices.

The oil market gained support after another bit of upbeat US economic data reinforced the bullish sentiment and backed policy makers decision to trim Feds monetary stimulus starting January.

The Department of Labor said today that the number of people who applied for initial jobless benefits fell more than expected in the seven days to December 21, adding to a recent series of strong US numbers. Initial Jobless Claims declined to 338 000, outstripping analysts projections for a lesser drop to 345 000. The preceding periods reading received an upward revision to 380 000, up from initially estimated at 379 000.

A Labor Department official said the year-end holidays were making it difficult to adjust for fluctuations for applications. The four-week moving average, which irons out weekly volatility, jumped to 348 000 last week from 343 750.

The number of people who continued to receive unemployment aid rose by 46 000 to 2.92 million in the seven days through December 14, hitting the highest since August. Americans who have used up their traditional payments and are receiving emergency and extended benefits fell by 40 700 to 1.33 million in the week ended December 7, the Labor Department said.

Todays data added to several upbeat readings from the US in the past couple of weeks. The Commerce Department reported on Tuesday that bookings for goods meant to last more than three years surged 3.5% in November, sharply exceeding projections for a 2.0% advance.

A separate report showed that purchases of new US homes surpassed analysts’ forecasts and remained near the highest level in five years, signaling the housing market retained momentum despite the rise in mortgage rates. New Homes Sales reached a 464 000 annualized pace, beating analysts’ projections for a drop to 435 000. October’s reading received an upward revision to 474 000, correcting the initial estimate of 444 000 homes sold.

On Monday, the final reading of the Thomson Reuters/University of Michigan consumer sentiment index confirmed the preliminary estimate and touched a five-month high of 82.5, despite trailing expectations for a rise to 83.0.

Christine Lagarde, the International Monetary Fund’s managing director, said last week the IMF is raising its outlook for the US economy as the reduction in Fed’s bond purchases and a budget deal in Washington eased concerns that the US economic growth might not be sustainable.

Inventories data

Market players also awaited the release of EIAs weekly US crude inventories data, due on Friday. According to a Bloomberg News survey, the report will likely show a drop of 2.3 million barrels in the seven days to December 20. Motor gasoline supplies are projected to have risen by 1.1 million barrels, while distillate stockpiles, which include diesel and heating oil, probably fell by 1 million barrels.

The industry-funded American Petroleum Institute reported an unexpected 716 000 barrels rise in US crude stocks on Tuesday. APIs report however is deemed less popular as it is based on voluntary information provided by operators of refineries, pipelines and bulk terminals, while the government requires reports to be filed with the EIA.

Strikes, South Sudan violence

Two of Totals refineries in France remained closed today for a fourteenth day amid a pay dispute, while workers lifted action on a third one, the CGT union reported. Albeit supporting gasoline prices, coupled with recent glitches at US refineries, the strikes have weighed on European crude demand.

Ongoing violence in South Sudan continued to underpin the market, adding to supply outages from Libya, the holder of Africas biggest crude reserves. Fighting in South Sudan has killed at least 500 people, forcing the government to evacuate oil workers. The country’s main investor China National Petroleum Company evacuated earlier its employees to the capital Juba.

Rebel forces loyal to former Vice President Riek Machar said they have captured the Unity state, a crude-producing region, which led to a loss of capacity amounting to 45 000 barrels per day and brought nationwide production to 200 000 bpd.

Masaki Suematsu, manager of the energy team at brokerage Newedge Japan, said, cited by CNBC: “The North African uncertainty is supporting Brent. Most of the news is bullish and the market volume is very thin so prices tend to move higher.”