MW: Oil rises for third day on U.S. data, IEA outlook
NEW YORK (MarketWatch) -- Oil futures rose Thursday for a third straight session as the International Energy Agency raised its forecast for world oil demand and as upbeat economic data in the U.S. boosted economic hopes.
The IEA raised oil demand outlook for the first time in 10 months. Meanwhile, U.S. government data showed initial jobless claims fell last week and retail sales increased in May.
July crude futures contract rose 64 cents, or 0.9%, to $71.94 a barrel on the Comex division of the New York Mercantile Exchange. It rose to $72.30 earlier.
"The IEA is the latest sign the historic drop in global oil demand may be bottoming out and changing course," said Phil Flynn, vice president at Alaron Trading.
"This adds to the bullish momentum created in the aftermath of yesterdays supply report."
In a monthly report released Thursday, the IEA, an energy advisor to 28 developed countries, increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day
The revision does not "necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," the IEA said in the report.
On Wednesday, a weekly report from the U.S. Energy Information Administration also showed signs of rising demand.
U.S. gasoline demand over the past four weeks rose 0.4% from the same period last year, the report showed.
Rising demand helped push crude inventories in the U.S. down by 4.4 million barrels, a surprise drop as analysts had expected a modest increase.
Crude futures ended above $71 Wednesday for the first time in more than seven months after the EIA data.
Also on Nymex on Thursday, July reformulated gasoline rose 3.47 cents, or 1.7%, to $2.0499 a gallon and July heating oil gained 1.85 cents, or 1%, to $1.8511 a gallon.
In exchange-traded funds, the United States Oil Fund (USO 39.42, +0.45, +1.16%) rose 1% to $39.36.
July natural gas rose slightly to $3.713 per million British thermal units.
The EIA will provide an update on natural-gas supplies in storage Thursday morning in Washington D.C. It's expected to report an increase of between 106 billion and 111 billion cubic feet for the week ended June 5, according to a Platts survey of analysts.
Economic data
In economic news Thursday, the Commerce Department estimated that U.S. sales at retail stores increased 0.5% in May, although much of the seasonally adjusted increase reflected higher gasoline prices.
Separately, the number of first-time claims for state unemployment benefits fell 24,000 to 601,000 in the week ended June 6, the Labor Department reported.
The upbeat economic data supported crude but pressured the U.S. dollar, as investors turned to higher-yield, riskier currencies. The euro was trading up 0.9% at $1.649.
"The claims data do support the green shoots story," said Win Thin, senior currency strategist at Brown Brothers Harriman & Co.
A weaker dollar tends to push dollar-denominated oil prices higher.
Some analysts, however, said oil's recent rally has been overdone.
Edward Meir, an analyst at MF Global, said that energy prices are "quite overbought."
"A moderate sell-off in the stock market should undoubtedly hit energy prices hard, as the various markets have all been marching higher in lockstep in recent weeks, and could easily reverse course if one of them falters," Meir said in a note.
