Rising demand in the US coupled with upbeat macroeconomic reports helped provide a strong enough boost to put oil prices well above the US$80/level and keep them there for the second straight day.
The US Energy Department said on Wednesday that inventories declined by 500,000 barrels, just a day after the American Petroleum Institute (API) reported a drop of 2.4 million barrels, reflecting a higher level of demand from the world’s largest energy consumer.
Equity markets were buoyant today after taking a break late in yesterday’s session, which saw a reversal of the early rally with the main stock market indexes moving into the negative territory.
The decline came despite a flurry of positive US data which came out on Thursday.
Initial jobless claims in the US unexpectedly dropped 16,000 to 473,000, while the less volatile four week moving average fell 6,250 to 458,000. Continuing claims decreased 83,000, falling to 4,457,000.
On top of that, the US GDP growth for the second quarter was revised upwards from 1.6% to 1.7%, while the Chicago PMI (purchasing managers index) rose from 56.7 to 60.4, reflecting a higher industrial activity in the Midwest.
The FTSE 100 rallied 1.2%, while futures for the Dow Jones and the broader S&P 500 indexes in the US rose 0.5%.
Investors are now looking to today’s updates on the Institute of Supply Management's (ISM) manufacturing index and the University of Michigan consumer sentiment index.
November Brent Crude climbed to US$82.97/barrel, while US light, sweet crude for November delivery rose to US$80.95/barrel.
Supermajors BP (LON:BP) and Shell (LON:RDSB) advanced 3.5% and 1.5% respectively. BG Group (LON:BG) rallied 4.6%, while Tullow Oil (LON:TLW) added 2.2% and Cairn Energy (LON:CNE) posted a small gain.
Amec (LON:AMEC) climbed 1%. Fellow oil and gas engineering firm Petrofac (LON:PFC) declined 1%.
Most midcaps followed the trend.
Heritage Oil (LON:HOIL) and Soco International (LON:SIA) tacked on nearly 1%, while Premier Oil (LON:PMO) and Salamander Energy (LON:SMDR) climbed 1.6% and 2.4% respectively.
Melrose Resources (LON:MRS) moved in the opposite direction, shedding 1%. JKX Oil & Gas (LON:JKX) posted a small loss.
Dana Petroleum (LON:DNX) was flat.
Services company Wood Group (LON:WG) stood just above the opening level.
Central and Southern America focused small cap oil and gas company Gold Oil (LON:GOO) was among the top risers in the sector with a 5% gain.