Oil climbed above $78 a barrel to a three-week high after initial US jobless claims dropped more than expected, prompting traders to close bets on falling prices. A strengthening labor market may boost consumer spending, the biggest part of the US economy.
Theres short-covering before the end of the year, said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. We have to watch carefully the economic datasome may be bad. We still need confidence to understand this market will stay strong.
Crude oil for February delivery rose as much as 63 cents, or 0.8%, to $78.68 a barrel in electronic trading on the New York Mercantile Exchange. Thats the highest intraday price since December 1. The contract was at $78.38 a barrel at 3:05 pm Singapore time. Futures, which lost 54% in 2008, have gained 76% this year, set for the biggest annual gain in a decade.
The number of Americans filing claims for unemployment benefits last week declined to the lowest level since September 2008, the Labor Department said December 24. Initial jobless claims fell by 28,000, more than forecast, to 452,000 in the week ended December 19.
The decline in US home prices probably eased in October while consumer confidence increased in December, economists said before separate reports tomorrow from S&P/Case-Shiller and the New York-based Conference Board.
Oil has more than doubled since slumping to $32.70 a barrel on Jan. 20, as traders bet demand for fuels will rebound when economies emerge from the global recession. Prices reached $82 a barrel on October 21. Last year, futures traded between $32.40 and $147.27 a barrel, an all-time high.
Crude is likely to rise this week on speculation fuel inventories will be drawn down as imports drop and demand increases, a Bloomberg News survey showed. Thirteen of 27 analysts and traders, or 48%, said futures will gain through December 31, the most bullish response since June. Twelve respondents, or 44%, forecast the market will be little changed and two said prices will decline.