Oil rose to a three-week high as a report showed American companies added more workers than forecast in June and on expectations US crude supplies fell.
Futures rose as much as 2.5 percent after data from ADP Employer Services showed a 157,000 gain in the number employed by businesses last month. An advance of 70,000 was projected, according to the median forecast by Bloomberg News. An Energy Department report will probably show that US stockpiles dropped a fifth week, a Bloomberg News survey showed.
“The economic data is better than expected,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “It appears that economists were too negative about the prospects for growth.”
Crude oil for August delivery rose $1.74, or 1.8 percent, to $98.39 a barrel at 9:35 a.m. on the New York Mercantile Exchange. The contract reached $99.05, the highest level since June 15. Prices are 33 percent higher in the past year.
Brent crude oil for August settlement climbed $2.68, or 2.4 percent, to $116.30 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $17.96 to US futures. The difference reached a record $22.29 on June 15.
US initial jobless claims fell by 14,000 to 418,000 in the week ended July 2, Labor Department figures showed on Thursday in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 420,000.
Morgan Stanley said it is bullish on oil in the second half of 2011 as production capacity falls.
Brent’s premium to US crude may widen to at least $40 a barrel between now and the middle of 2012, according to Citigroup Global Markets Inc. Increased output in western Canada and the US midcontinent has led to near-record supplies at Cushing, Oklahoma, the delivery point for New York-traded West Texas Intermediate oil, the bank said in a note on Wednesday.
Goldman Sachs Group Inc on Thursday reiterated its long-trading recommendation for Brent futures.
“We continue to expect that oil demand growth fueled by moderate economic growth expectations will be sufficient to draw down crude oil inventories,” Goldman analysts led by London- based Jeffrey Currie said in a report dated on Thursday.
US crude oil inventories decreased 2.5 million barrels in the week ended July 1, according to the median estimate of 15 analysts surveyed by Bloomberg News before on Thursday’s Energy Department report. The American Petroleum Institute said on Wednesday that supplies dropped 3.2 million barrels last week.
Thursday’s report will probably show that gasoline stockpiles probably slid 150,000 barrels. Supplies of distillate-fuel, a category that includes heating oil and diesel, are expected to have risen 900,000 barrels.
The Energy Department is scheduled to release its weekly report at 11 a.m. in Washington, a day late because of the Fourth of July holiday.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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