Oil rallies to three week high on strong US jobs data
NEW YORK, May 4 — Oil jumped more than US$1 (RM3.03) to the highest in at least three weeks today, spurred on by better-than-expected job growth in the United States that raised the prospect of stronger demand in the world’s top oil consumer.
US payrolls rose more than expected in April, pushing the unemployment rate to a four-year low of 7.5 per cent, easing concerns about a sharp slowdown in the economy.
Brent crude rose US$1.34, or 1.3 per cent, to settle at US$104.19 a barrel after a high of nearly US$105. The contract jumped 2.9 per cent on Thursday after the European Central Bank cut interest rates to record lows. It has risen by more than 4 per cent in two days, the best such gain since early November.
US crude settled up US$1.62, or 1.7 per cent, at US$95.61, its highest close since April 3.
“I think the tone for the day was set by the employment numbers, and certainly the new highs in the S&P 500 helped to generate a wider risk-on trade flow,” said Tim Evans, an energy analyst with Citi Futures Perspective.
Other riskier assets also pressed higher, with US equity markets reaching intraday record highs. Copper jumped more than 6 percent and the S&P 500 stock index closed 1 per cent higher.
Evans said bullish traders were vulnerable to a swing in market sentiment, since US crude stocks are at an all-time high and he has not seen sustained evidence of rising demand.
US crude has outperformed Brent crude for the second straight day, narrowing the spread between the two benchmarks to US$8.58 at settlement, its lowest since June 2012.
The US employment report outweighed bearish data showing weak manufacturing activity in the United States and China. The US Commerce Department yesterday said orders for manufactured goods dropped 4 per cent in March.
Weak manufacturing news from China, the world’s No. 2 oil consumer, is still clouding the outlook for global demand.
“I think the PMIs (purchasing manager indexes) which we’ve seen this week still remind us that in China we need to see further evidence of stabilization. And in the United States we want to see signs that are a little less stop-start,” said Ben Taylor of Sydney-based CMC Markets.
Money managers raised their net long U.S. crude futures and options positions in the week to April 30, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
The speculator group raise its combined futures and options position in New York and London by 13,108 contracts to 243,927 during the period. — Reuters