Oil advanced to a four-month high after U.S. builders broke ground on more houses than forecast and jobless claims dropped to a five-year low, bolstering optimism for the economy.
Futures rose 1.3 percent as Commerce Department figures showed housing starts climbed to the highest level since June 2008. Applications for jobless benefits fell to the least since January 2008, the Labor Department said. Gains accelerated after Algerian forces stormed a gas complex in the southern desert where an al-Qaeda-linked group was holding hostages.
“The primary reason for today’s market moves are improving economic conditions,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The news from Algeria may be adding to the rally because of increasing fears about threats to energy facilities.”
Crude oil for February delivery advanced $1.25 to $95.49 a barrel on the New York Mercantile Exchange, the highest settlement since Sept. 17. Prices are up 4 percent so far this year. Volume was 52 percent above the 100-day average.
Brent oil for March settlement gained $1.42, or 1.3 percent, to $111.10 a barrel on the London-based ICE Futures Europe exchange. The February contract expired yesterday. Volume was 18 percent above the 100-day average.
The front-month European benchmark contract was at a $15.16 premium to March West Texas Intermediate oil futures traded in New York based on settlement prices, the narrowest spread since July 24.
Housing starts climbed 12.1 percent to a 954,000 annual rate in December, the Commerce Department reported today in Washington. For all of last year, construction began on 780,000 homes, up from 608,800 in 2011 and also the most since 2008.
Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the fewest since January 2008. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey.
“The economic numbers have been positive and the market is reacting,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “These figures give us reason to believe future oil demand will be stronger.”
The Standard & Poor’s 500 Index (SPX) and the Dow Jones Industrial Average rose 0.8 percent each on the economic data. The euro climbed as much as 0.7 percent against the dollar. The common currency strengthened against all 16 counterparts after Spain’s borrowing costs decreased at a 4.5 billion bond auction. A stronger euro boosts the appeal of commodities as an investment.
Algerian security forces released some foreigners in the struggle for the complex, the state-run Algerian Press Service reported. As many as half of the hostages have been freed, according to the report, which didn’t provide a casualty toll. The attackers said yesterday they were holding 41 foreigners abducted at the natural gas facility.
“The hostage drama in Algeria makes you wonder how many oil facilities are vulnerable in North Africa, especially in neighboring Libya,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This should increase the security premium.”
Libya’s government has been struggling to rein in militias and armed groups that have hampered rebuilding efforts since Muammar Qaddafi’s ouster and death in 2011. The country holds Africa’s biggest proven oil reserves.
Futures advanced 1 percent in New York yesterday after a report from the Energy Information Administration showed that U.S. crude stockpiles fell 951,000 barrels to 360.3 million in the seven days ended Jan. 11.
Gasoline supplies rose for an eighth week to 235 million barrels, according to the data from the Energy Department’s statistical arm. Stockpiles of distillate fuel, a category including heating oil and diesel, advanced to 132.4 million.
“We had very good jobless numbers and the housing numbers were very nice,” Lynch said. “This combined with the somewhat bullish inventory numbers yesterday should have the market exploring the upside for the near term.”
China’s National Bureau of Statistics is projected to report at 9 p.m. New York time that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of 53 economists surveyed by Bloomberg News. That’s up from a three-year low of 7.4 percent in the previous period.
The U.S. accounted for 21 percent of the world’s oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. China, the second-biggest crude-consuming country, was responsible for 11 percent of global demand.
The Organization of Petroleum Exporting Countries will curb its rise in shipments this month, tanker tracker Oil Movements said. OPEC will export 23.64 million barrels a day in the four weeks to Feb. 2, up 70,000 barrels from the previous period, the Halifax, England-based researcher said today in an e-mailed report. Shipments were to climb 210,000 barrels a day in the four weeks to Jan. 26. The figures exclude Angola and Ecuador.
Electronic trading volume on the Nymex was 660,276 contracts as of 3:15 p.m. Volume totaled 687,794 contracts yesterday, 41 percent above the three-month average. Open interest was 1.48 million.
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