WTI crude rises to two-month high after U.S. jobless claims drop

West Texas Intermediate crude rose to a two-month high on a report showing that fewer Americans than projected filed applications for unemployment benefits.

Futures climbed as much as 0.5 percent. U.S. jobless claims fell by 42,000 to 338,000 last week, Labor Department data show. The median forecast of 42 economists surveyed by Bloomberg called for a drop to 345,000. A government report tomorrow will probably show U.S. crude supplies slipped 2.65 million barrels last week, according to a Bloomberg survey. Markets in London and New York were closed yesterday for Christmas.

“The focus of the market has been economic strength,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We’ve been seeing strong fuel demand and can expect it to increase further.”

WTI for February delivery rose 41 cents, or 0.4 percent, to $99.63 a barrel at 1:30 p.m. on the New York Mercantile Exchange. The contract touched $99.70, the highest price since Oct. 22. The volume of all futures traded was 81 percent below the 100-day average. Prices have advanced 8.5 percent in 2013, set for the fourth annual gain in five years.

Brent for February settlement increased 13 cents to $112.03 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 83 percent lower than the 100- day average.

The European benchmark grade traded at a $12.40 premium to WTI, down from $12.83 on Dec. 24.

 

Equities Rise

 

U.S. equities also increased, extending records for benchmark indexes, after the release of the employment data. The Standard & Poor’s 500 Index climbed 0.4 percent and the Dow Jones Industrial Average 0.6 percent.

U.S. crude stockpiles fell to 369.7 million barrels in the seven days ended Dec. 20, according to the median estimate of 10 analysts surveyed by Bloomberg on Dec. 23-24. Supplies increased by 716,000 barrels to 368.5 million, the industry-funded American Petroleum Institute said on Dec. 24.

“If there’s a supply drop in tomorrow’s report it could send the market flying to $100,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York.

Gasoline inventories probably rose by 1.1 million barrels last week, according to the survey. Distillate supplies, including diesel and heating oil, are projected to have decreased by 1 million.

The Energy Information Administration is scheduled to release its stockpile report at 11 a.m. tomorrow in Washington. The government requires that data be filed with the Energy Department’s statistical arm, while the API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

 

Technical Signal

 

WTI has settled the past three days above its 200-day moving average, at $98.92 a barrel today, data compiled by Bloomberg show. Investors typically buy contracts when prices sustain an advance above chart-resistance levels.

“We’re getting technical support,” Yawger said. “We’ve been trading above the 200-day moving average all day and if we close above it again that could set us up to move higher tomorrow even if the report shows a build.”

Implied volatility for at-the-money WTI options expiring in February was 13.6 percent, up from 13.2 on Dec. 24, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 71,212 contracts at 1:31 p.m. It totaled 138,784 contracts Dec. 24, the lowest level since Dec. 24, 2012. Open interest was 1.6 million contracts.

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