Crude Up on Hopes for Economy; Brent Tops $90/bbl
Source: The Wall Street Journal (12/2/10)
"Oil prices gained momentum from rising equities markets and improving economic data."
Oil prices gained momentum from rising equities markets and improving economic data. U.S. initial unemployment claims climbed by 26,000 to 436,000 last week, the Labor Department said Thursday. While the rise was larger than expected, the four-week moving average, which aims to smooth out fluctuations in the data, fell to the lowest level in more than two years.
The data follow a series of economic reports this week that have suggested the economy is improving, an important sign for the oil market as investors try to gauge future demand after a sharp rebound in prices Wednesday that again put futures on a path toward $90 a barrel.
"We came in today and we saw kind of a lull," said Matt Smith, an oil analyst with Summit Energy. "But now we're getting some positive momentum from the euro, from yesterday's inventory numbers and from equities as well."
The Dow Jones Industrial Average was recently up 101 points to 11357. The euro rose 0.8% to $1.3219 after the European Central Bank abandoned its plans to wind down emergency support for banks and government debt markets, responding to concerns that an early exit from such programs could jeopardize the euro currency.
On Wednesday, data showed U.S. productivity rose more than expected in the third quarter. A separate report showed the largest monthly increase in private sector jobs in three years.
Inventories of U.S. crude and oil stockpiles have fallen from 27-year highs hit in September. On Wednesday, traders looked past a surprise rise in weekly stockpiles. Instead, they focused on a sharp decline in the dollar, which makes oil cheaper for buyers in other currencies, and optimistic economic reports from the U.S. and China.