BLBG: Oil Trades Near a Two-Year High as U.S. Employment Figures Beat Forecasts
Oil traded near a two-year high in New York after employment in the U.S. increased more than forecast, signaling a recovery in fuel demand from the world’s biggest crude-consuming nation.
Futures pared earlier gains above $87 a barrel as the dollar strengthened against the euro, curbing investor demand for commodities. Payrolls climbed by 151,000 workers in October following a revised 41,000 drop the prior month, the Labor Department said Nov. 5. Prices jumped 6.7 percent last week, the most since February.
“Oil is quite positive, the market has taken heart in the unemployment rate,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Crude has broken through the topside of the range, so you’ve got to look for higher prices.”
Crude for December delivery was at $86.91 a barrel, up 6 cents, in electronic trading on the New York Mercantile Exchange at 3:25 p.m. Singapore time. The contract earlier rose as much as 64 cents, or 0.7 percent, to $87.49, the highest since Oct. 9, 2008. Futures, which surged 78 percent in 2009, are up about 10 percent this year.
The increase in U.S. payrolls was the first since May and exceeded all estimates from economists surveyed by Bloomberg News. The U.S. jobless rate held at 9.6 percent, where it’s been since August, according to the Labor Department.
Rising Streak
Oil is in the longest rising streak since a six-day rally through April 6, amid speculation the Federal Reserve’s stimulus program will weaken the dollar. A declining U.S. currency tends to boost the appeal of raw materials priced in dollars. Gold for immediate delivery reached a record high of $1,398.60 an ounce.
The Fed said Nov. 3 it will buy an additional $600 billion of Treasuries through June to spur the economy. The dollar last week dropped to $1.4282 against the euro, the weakest level since Jan. 20. It strengthened for a second day versus the 16- nation currency on bets Ireland will struggle to garner support for its budget and as political uncertainty in Greece damped demand for the region’s assets.
Hedge funds ramped up bullish bets on oil to the highest level since at least June 2006 as the Fed enacted stimulus measures. The funds and other large speculators increased wagers on rising prices by 8.6 percent in the seven days ended Nov. 2, according to the U.S. Commodity Futures Trading Commission.
Brent crude for December settlement traded at $88.10 a barrel, down 1 cent, on the London-based ICE Futures Europe exchange. On Nov. 5, the contract gained 0.1 percent to settle at $88.11.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net.
