Crude gains most in six months on jobless data as ECB cuts rate

Employment Report

The Labor Department will release April employment figures tomorrow. Economists surveyed by Bloomberg forecast the jobs market made some headway last month, with payrolls growing by 140,000 after a gain of 88,000 a month earlier. The unemployment rate probably held at a four-year low of 7.6%, the survey showed.

The Standard & Poor’s 500 Index increased as much as 1% on the ECB rate cut and the jobless claims.

“The petroleum markets are tracking moderately higher in sympathy with rising equity prices,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York, in an e-mail. “Friday’s U.S. employment report for April will be the next significant macroeconomic data point.”

ECB President Mario Draghi signaled that officials may take the unprecedented step of charging banks to park excess cash with the ECB overnight and that another cut in the main rate is possible.

ECB Cut

“The ECB rate cut certainly has an effect on asset prices and in the longer term on oil demand,” Lynch said.

The ECB’s move came after the Federal Reserve said yesterday that it will keep buying bonds at a monthly pace of $85 billion. The U.S. central bank said it’s “prepared to increase or reduce the pace of its purchases.”

Crude futures advanced as natural gas dropped 7%, the most in nine months, after a government report showed that U.S. gas stockpiles expanded by more than forecast.

“We are getting a really crazy selloff in natural gas, so you might have some positions being liquidated in WTI to cover margin in gas,” Schork said.

June natural gas slid 30.1 cents to settle at $4.025 per million British thermal units.

“There is an unwinding of the long-natural-gas, short- crude trade,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “People are de-leveraging out of gas and buying crude.”

Implied volatility for at-the-money WTI options expiring in June was 23.6%, compared with yesterday’s 25.9%, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 575,649 contracts as of 3:27 p.m. It totaled 736,155 contracts yesterday, 26% above the three-month average. Open interest was 1.75 million contracts.

Bloomberg News

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