West Texas Intermediate crude gained the most in almost six months as the number of Americans filing applications for unemployment benefits slipped and the European Central Bank reduced interest rates to a record low.
Oil climbed for the first time in three days after the government said jobless claims unexpectedly fell to the least in five years last week. ECB policy makers cut the main refinancing rate to 0.5% from 0.75%. WTI extended gains as natural gas tumbled, forcing traders to liquidate bets that oil prices would drop to meet cash demand, said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania.
“The jobless claims and the ECB rate cut are providing support to the oil market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The markets continue to go back and forth on changing economic perceptions.”
WTI for June delivery rose $2.96, or 3.3%, to settle at $93.99 a barrel on the New York Mercantile Exchange, the biggest one-day increase since Nov. 6. The volume of all futures traded was 19% above the 100-day average for the time of day.
Brent for June settlement gained $2.90, or 2.9%, to $102.85 a barrel on the London-based ICE Futures Europe exchange. Volume was 42% above the 100-day average. Brent’s premium to WTI shrank to $8.86 a barrel, the least based on settlement prices since Dec. 30, 2011.
The U.S. jobless claims fell 18,000 to 324,000 in the week ended April 27, the fewest since January 2008, a month after the last recession started, the Labor Department reported today in Washington. Economists surveyed by Bloomberg forecast 345,000 claims.
“The U.S. economy is probably not as bad as people thought, and with any luck we’ll see other indicators become more bullish,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Futures tumbled 3.7% in the previous two sessions amid signs of a slowdown in economic growth in the U.S. and China and as U.S. oil inventories reached an 82-year high.
“These moves are exaggerated and just show what happens with increased computerized trading,” said McGillian. “Over the next few months we should see a headline driven market with big moves.”