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Oil prices diverge on eve of US jobs data

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(Globalpost/GlobalPost)

Oil prices rose in New York on Thursday as dealers eyed the weaker dollar and upbeat US data, but Brent slipped on the eve of steep spending cutbacks and non-farm payrolls figures.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for April gained 79 cents to $91.22 a barrel.

Brent North Sea crude for delivery in April fell six cents to $111 per barrel in late afternoon deals, erasing earlier gains.

Brent was also held back by news of improving supplies as supply resumed from the Buzzard oil field and a key pipeline returned to service.

In foreign exchange deals, the euro rose as high as $1.3117 after the European Central Bank held eurozone interest rates at a record low 0.75 percent, in line with market expectations. It later pulled back slightly to stand at $1.3094.

The weaker greenback makes dollar-denominated crude cheaper for buyers using stronger currencies, and this tends to stimulate oil demand and prices.

"Crude oil prices found some direction and climbed higher on Thursday ... as interest rates remained unchanged, as widely expected," said Sucden analyst Myrto Sokou.

"It seems that the oil market gets positioned ahead of the US non-farm payroll (NFP) figures tomorrow, especially following the recent robust US employment figures that increased risk appetite and boosted market sentiment."

New York crude won support after government data showed that new claims for US unemployment benefits fell last week to 344,000, in line with the recent trend after the previous week's spike higher.

Claims, an indicator of the pace of layoffs across the country, fell by 22,000 in the week to February 23 from the previous week's revised 366,000.

Concerns were meanwhile mounting Thursday that the "sequester" federal spending cuts expected to come into effect Friday will cause a spike in layoffs by government contractors and temporary government employees.

Federal Reserve Chairman Ben Bernanke told Congress this week that unemployment remains the biggest challenge to the US economy.

The oil market had fallen on Wednesday after the US Department of Energy revealed that American crude stockpiles surged by more than eight times the expected amount, indicating weak demand in the world's top consumer.

The DoE had announced that crude reserves soared by 3.8 million barrels in the week ending March 1.

That was far more than market expectations for a modest gain of 500,000 barrels, according to analysts polled by Dow Jones Newswires.

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http://www.globalpost.com/dispatch/news/afp/130307/oil-prices-diverge-eve-us-jobs-data