Connect to share and comment

Brent oil hits new three-month high before US payrolls data

PlacardEnlarge
(Globalpost/GlobalPost)

Brent oil prices struck a fresh three-month high on Friday, boosted by the weak dollar and Chinese data, as traders awaited key economic figures in top crude consumer the United States, dealers said.

In early afternoon London deals, Brent North Sea crude for delivery in March rallied to $115.97 per barrel -- which was the highest level since October 15.

The Brent contract later stood at $115.88, which marked a gain of 32 cents from Thursday's closing level.

Elsewhere, New York's main contract, light sweet crude for March, or West Texas Intermediate (WTI), dropped 26 cents to $97.23 a barrel.

"Crude oil prices consolidate ahead of the release of the crucial US non-farm payroll data that will set the tone for today's trading session," said analyst Myrto Sokou at the Sucden brokerage in London.

"WTI crude oil is holding above $97 per barrel, while Brent oil remains fairly strong, climbing toward $116.

"The dollar remains fairly weak, providing strong support and further upside momentum to the oil market."

The European single currency surged to $1.3675, its highest level since November 2011, following upbeat manufacturing data in the eurozone.

The weaker greenback makes dollar-priced crude cheaper for buyers using stronger currencies like the euro. This tends to boost demand and prices.

The oil market was also buoyed by growing optimism over the US and European economies, ahead of the key US non-farm payrolls report at 1330 GMT.

"Today, Brent's attention turns back to macro developments with the US January NFP report in focus," said analyst Andrey Kryuchenkov at Russian financial services group VTB Capital.

"At over three month highs, the market is still technically overbought and we expect a small correction if the short-term uptrend finally gives. Naturally, much will depend on global risk sentiment today."

Prices had also jumped higher on Wednesday to multi-month peaks, supported this week's Federal Reserve monetary policy announcement, as well as unrest in the oil-rich Middle East region.

New York crude soared to $98.24 per barrel, which was the highest level since September 17.

"There has been a lot of good news. Europe is on a brighter note, and the US has deferred debt ceiling talks. General optimism continues to buoy the market," said Yang Weiming, premium client manager at IG Markets Singapore.

US lawmakers on Thursday suspended the country's debt ceiling until May, giving them three months to hold high-stakes budget negotiations to avert a potentially catastrophic default.

And while data showed the US economy shrank 0.1 percent in the fourth quarter of 2012, there were upbeat signs, with private consumption, business investment and housing all seeing growth.

In Europe, eurozone economic sentiment improved across all sectors in January, according to an index compiled by the European Commission.

The oil market meanwhile won partial support from manufacturing data in top global energy consumer China.

Chinese data showed the official purchasing managers' index (PMI) came in at 50.4 in January. That marked a slowdown from 50.6 in the previous month but still showed growth.

A separate PMI from British bank HSBC came in at a two-year high of 52.3 for last month, up from a preliminary 51.9 released last week and a final 51.5 in December. Its survey focuses on smaller enterprises.

A reading above 50 indicates expansion, while anything below points to contraction.

burs-rfj/rl

http://www.globalpost.com/dispatch/news/afp/130201/brent-oil-hits-new-three-month-high-us-payrolls-data