The rally in oil prices was extended into the second day on Thursday as the markets shook off yet more disappointing jobs data and downbeat comments from the Federal Reserve.
Today’s jobless claims data from the Labor Department added more gloom to the outlook for the job market recovery, showing an unexpected rise in initial jobless claims by 1,000 to 427,000. Last week it was reported that non-farm payrolls in the US increased by just 54,000 in May, which was roughly a third of the expected gain of over 150,000.
Earlier this week, chairman of the Federal Reserve Ben Bernanke called the economic growth in the US “frustratingly slow”, while giving no indications that the Fed will change its monetary policy in response to the slowdown in the job market.
Crude oil futures are enjoying strong support from the Organization of Petroleum Exporting Countries’ (OPEC) surprising decision not to raise output and Wednesday’s inventories data from the US Government.
The Department of Energy reported that crude oil stockpiles in the US shed a massive 4.8 million barrels last week, indicating strong demand from the world’s largest energy consumer.
The prices are driven by expectation of supply shortage in the market resulting from OPEC’s reluctance to hike production quotas.
The US government has just upped its projection for global oil demand growth by 0.3 million barrels per day to 1.7 million barrels per day for the current year.
US light, sweet crude for July delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), climbed to US$101.62/barrel, while August crude reached US$102.07/barrel.
July Brent crude last traded at US$118.12/barrel on the ICE Exchange.
Supermajors BP (LON:BP) and Royal Dutch Shell (LON:RDSB) rose marginally, as did BG Group (LON:BG). Services company Wood Group (LON:WG) advanced 1.35 percent.
Midcaps Heritage Oil (LON:HOIL) and Salamander Energy (LON:SMDR) dropped 1 percent.
Central and Eastern European focused Aurelian Oil & Gas (LON:AUL) and EU focused Northern Petroleum (LON:NOP) were among the top performers in the sector, tacking on 5 percent.