Oil Prices Surge on US Job Figures

Increased Oil Prices in the World Market and lower claims for jobless benefits lifted market sentiment.

Oil prices in the world market jumped on Thursday on the back of a decrease in new weekly claims for unemployment benefits and a weak US dollar.

Light sweet crude for October, New York's main contract, was up 84 cents to $73.36 per barrel as it recovered from three-month lows, while Brent North Sea of London for October rose $1.54 to $75.02 per barrel.

According to Adam Siemenski, analyst at Deutsche Bank, low crude stocks and a US report showing lower claims for jobless benefits lifted market sentiment.

“The combination of these things has put a little strength in the oil market,” Siemenski said.

The US Department of Labor revealed on Thursday a decline in unemployment benefit claims from the previous week's total of 504,000 to 473,000 for the week to August 21.

The numbers are better than expectations of 485,000 but analysts warn that the underlying condition remains weak.

“Initial jobless claims still were not anything to write about. The fundamental picture (in the United States) continues to remain really weak,” says Gene McGillian, analyst at US-based consultancy firm Tradition Energy.

Oil prices got a boost from increasing European stock markets and a weaker greenback, which urged many traders to ignore a huge increase in US crude reserves.

A weak dollar makes dollar-priced commodities less expensive for buyers using stronger currencies and tends to spur demand.

On Wednesday, oil was also lifted despite weak US economic figures and a significant increase in US crude reserves that suggested weaker demand in America.

Posted by James Fried on Friday August 27 2010, 8:03 AM EDT. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0