OIL FUTURES: Crude Futures Jump After Strong US Payrolls Data
Published: Feb 03, 2012
By Dan Strumpf
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude-oil futures rose Friday after the U.S. government said employers there added 243,000 jobs last month, bolstering expectations that oil demand from the world's biggest crude consumer will improve.
Light, sweet crude for March delivery rose 71 cents, or 0.7%, to $97.07 a barrel on the New York Mercantile Exchange. The U.S. benchmark was little changed prior to the 8:30 a.m. EST data.
Brent crude on ICE Futures Europe rose $1.78, or 1.6%, to $113.85 a barrel.
Futures pushed higher after the release of the Labor Department's nonfarm payrolls report, which also said the unemployment rate fell by two-tenths of a point to 8.3%, its lowest level since February 2009.
Economists surveyed by Dow Jones Newswires predicted 125,000 new jobs added.
"It's all jobs. What a number," said Dominick Chirichella, analyst at the Energy Management Institute in New York.
However, he added that any improvement in oil demand is likely far off, and futures could easily reverse course later in the session,.
"I think it's going to take a long time for that demand to recover," Chirichella said.
The report was the latest piece of good news for the still-weak U.S. labor market. U.S. unemployment has fallen from 9.1% since August.
Throughout the economic slowdown, unemployment in the U.S. has squelched oil demand by keeping more motorists off the road and curbing demand for products made from oil.
Earlier this week, the U.S. Energy Information Administration said U.S. oil use fell to a 13-year average daily low of 17.7 million barrels a day last week. Overall oil inventories rose by a greater-than-expected 4.2 million barrels for the week, as refineries curbed their operations.
"WTI crude has been in the doldrums this week, with weak oil demand numbers out of the U.S.," Matt Smith, analyst at Summit Energy in Louisville, Ky., said in a research report.
The weak pace of demand in the U.S., as well as the fiscal turmoil in Europe, has forestalled any big jump in oil prices this year. Still, futures remain supported by tensions between Western countries and Iran, which has threatened to cut off oil exports to Europe.
The result is that prices have stuck to a narrow range in 2012, holding between $95 to $100 a barrel.
The standoff with Iran has been a major factor behind the recent rally of Brent crude prices over the Nymex contract. Iran supplies some 600,000 barrels of oil a day to the European Union, which along with the U.S. has ramped up sanctions in recent months over Tehran's nuclear program.
"The European benchmark crude is drawing support from a cocktail of oil factors including healthy Asian demand and persistent uncertainty regarding the Iran question," analysts at JBC Energy, a consultancy, analysts said in a research report.
The disparity, or spread, between the two contracts recently stood near $17 a barrel, up from a recent low of less than $7 a barrel in late December.
Front-month March reformulated gasoline blendstock, or RBOB, recently traded up 4.92 cents, or 1.7%, to $2.9181 a gallon. March heating oil traded up 4.57 cents, or 1.5%, to $3.0986 a gallon.
-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com.
