NEW YORK: US crude rose and Brent futures pared losses yesterday, lifted by supportive economic data from the United States after a plentiful supply picture and Chinese economic data had earlier pressured prices.
Sales of existing US homes rose to a 10-month high in July and the number of initial jobless claims fell last week, signaling third-quarter strength in the economy.
Separate reports showing factory activity in the mid-Atlantic region in August at its highest level since March 2011 and a gauge of future economic activity up solidly last month added to the hopes for improving demand for oil.
“US crude might have a gotten a little ahead of itself to the downside recently given the strong demand from US refiners and the relative of strength of the US economy, as this morning’s data show,” said John Kilduff, partner at Again Capital LLC.
The world’s top crude oil benchmarks have fallen more than $10 a barrel since June on a build-up of supply in the Atlantic Basin and continued production from Iraq and Libya despite the risk of supply disruption from the region’s conflicts.
US October crude was up 61 cents at $94.06 a barrel at 11:43 am EDT (1543 GMT), having recovered after dropping to $92.50, the lowest since January 15. The US September contract expired on Wednesday at $96.07, up $1.59 on the day and with the premium of the front-month over the nearby contract reaching $3.12 intraday.
Data showing a large drop in crude inventories last week and refinery capacity use at a robust 93.4 percent helped spark Wednesday’s rally.
Brent October crude yesterday was off 21 cents at $102.07, well above its $101.21 intra-day low. Brent fell to $101.07 on Tuesday, its lowest since June 26, 2013, the same month it was last traded under $100 a barrel.
demand worries
Along with worries about demand, increasing supplies from Opec member nations has eased fears of supply disruptions.
Libya has resumed exports from its largest port, helping lift oil production to its highest in months, while Saudi Arabia raised its output in July to 10m barrels per day (b/d).
“Supply fears have been quelled by an increased export volume from Libya,” said Dorian Lucas, an analyst at energy consultancy Inenco. As Brent’s retreat neared $100, there was talk that Opec could consider cutting output, although delegates from the producer group have said higher seasonal demand in coming weeks is expected to support the market.
Reuters
