Oil rises towards $76 on US inventories, economy

Oil rises towards $76 on US inventories, economy

Singapore: Oil rose for the sixth straight session to near $76 a barrel on Thursday, touching its highest in a year after US industry data showed a surprise fall in crude stockpiles, suggesting that demand in the world’s top oil consumer is recovering.

Further evidence for economic recovery came from the Dow industrials piercing the 10,000 level for the first time in a year, while the dollar slumped to a fresh 14-month low against the euro as surprisingly robust corporate results cheered investors and whetted appetite for higher yielding currencies.

Traders will scour weekly jobless claims and the US Energy Information Administration (EIA) inventory data later in the day for confirmation that consumption in the world’s largest economy is on the mend.

US crude for November delivery rose 62 cents to $75.80 a barrel by 0220 GMT, after surging as high as $75.90 earlier in electronic trading, its highest since October 2008. London Brent crude was unchanged at $73.10.

Crude, up 1.8% on the year, is now in positive territory on a year-on-year basis for the first time since 10 October 2008. The six straight days of gains mark its longest winning streak since July.

“What’s driving oil’s rally is basically the weaker dollar and Wall Street, so if we get a collapse in the stock market, all bets could be off," said Tony Nunan, risk manager at Tokyo-based Mitsubishi Corp.

“I think the market has gotten ahead of itself, because inventories are still too high, and there’s no shortage of crude."

Earnings are due this week from several major US companies, and the oil market is tracking results for signs of an economic rebound.

JPMorgan Chase & Co reported a sharp rise in third-quarter results, helping to bump up US stocks on Wednesday.

US crude stocks fell 172,000 barrels last week against expectations of a 700,000 barrel rise, according to data from the American Petroleum Institute (API) on Wednesday. The EIA is due to release its report at 1500 GMT.

US weekly jobless claims due at 1230 GMT will shed more light on the economy’s pace of recovery. Economists polled by Reuters forecast a total of 525,000 new filings compared with 521,000 in the prior week.

“The market will continue to be choppy going forward, depending on the kind of economic data that we get. We’ve had a week of gains, I think we’re due for a correction soon, with some support at $70," Nunan said.