MW: Oil rises 3% as traders see sunny side to GDP report
Crude-oil futures rose more than 2% to trade near $54 a barrel Thursday, as government data showed the U.S. economy contracted sharply in the final three months of 2008, but at a rate less than economists had expected.
Also helping investment sentiment, U.S. stocks opened broadly higher. European and Asian stocks also made gains.
U.S. gross domestic product shrank at a 6.3% seasonally adjusted rate in the fourth quarter, the Commerce Department reported. The annualized pace came in smaller than the 6.7% decline that economists surveyed by MarketWatch had been looking for. See Economic Report.
"Things are terrible but not as bad as feared," said Phil Flynn, vice president at Alaron Trading. "Oil is on a manic macroeconomic journey. Just focus on the hope that the economy won't go into total meltdown."
On the New York Mercantile Exchange, crude for April delivery gained $1.02, or 1.9%, to $53.77 a barrel. This recouped losses from Wednesday, when the benchmark contract fell more than 2% as data showed U.S. crude inventories rose to the highest level in 16 years last week.
Also Thursday, the U.S. government said the number of people collecting state unemployment benefits jumped 122,000 to a seasonally adjusted 5.56 million in the week ended March 14, while first-time claims for the week ended March 21 rose 8,000 to 652,000, 78% higher than the same period in the prior year.
On Wednesday, the Energy Information Administration reported crude inventories rose 3.3 million barrels last week, far more than had been expected. At 356.6 million barrels, stockpiles are at the highest level since July 1993.
Total petroleum products supplied over the past four weeks averaged 19.1 million barrels a day, down 3.2% from a year ago, the EIA reported.
"The inventories report is a reminder that we still have too much oil in stockpiles," said James Williams, an economist at energy research firm WTRG Economics. "It could add pressure on prices across the board in the following sessions."
In other energy trading Thursday, April-dated reformulated gasoline rose 1.7% to $1.5205 a gallon and April heating oil added 1.7% to $1.4896 a gallon.
Ahead of inventories data, April natural-gas futures fell 0.6% to $4.304 per million British thermal units.
The EIA is scheduled to report on gas in storage for last week. Analysts surveyed by Platts expect a decline of 5 billion cubic feet to 10 billion cubic feet.
