Crude Oil Ends Higher, Back Over $50 A Barrel

(RTTNews) - U.S. crude oil jumped to settle sharply higher Thursday, after a better than expected initial claims data for unemployment benefits from the U.S. and on hopes that demand for oil would pick up with the European Commission's optimistic take on the eurozone economy.

The European Commission on Thursday said cheaper oil and a weaker euro have brightened the growth outlook for the eurozone with every member economy expected to grow for the first time since 2007.

Nonetheless, geopolitical tensions and the financial market volatility due to diverging monetary policy in major economies, as well as the turbulence linked to the developments in Greece could pose significant risks.

In economic news, a Labor Department report showed first-time claims for U.S. unemployment benefits rebounded but less than expected in the week ended January 31, after having reported a notable decrease in the previous week.

U.S. trade deficit unexpectedly widened in December with imports jumping and exports falling, a Commerce Department report said Thursday. This was the widest deficit since November 2012. Meanwhile, labor productivity in the U.S. showed an unexpected decrease in the fourth quarter of 2014, a report from the Labor Department revealed Thursday.

Nevertheless, markets continue to remain oversupplied just as demand continues to dwindle due to economic weakness in Europe and Asia. OPEC has already signaled it is comfortable with oil at these levels, while non-OPEC producers are starting to feel the pinch. Layoffs in the oil and gas industry in the U.S. have skyrocketed in the past few months.

Yesterday saw one of the biggest one-day collapses in oil prices, brought on by U.S. crude oil inventories data.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, surged $2.03 or 4.2 percent to settle at $50.48 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for March delivery scaled a high of $52.10 a barrel intraday and a low of $47.36.

On Wednesday, crude oil plunged to end at $48.45 a barrel, down $4.60 or 8.7 percent, as supply glut concerns resurfaced after an official weekly oil report from the Energy Information Administration showed crude stockpiles in the U.S. to have surged more than expected last week.

The U.S. Energy Information Administration's report showed U.S. crude oil inventories to have jumped 6.3 million barrels in the week ended January 30. Analysts expected an increase of 2.8 million barrels.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 93.53 on Thursday, down from its previous close of 94.57 late Wednesday in North American trade. The dollar scaled a high of 94.55 intraday and a low of 93.52.

The euro trended higher against the dollar at $1.1486 on Thursday, as compared to its previous close of $1.1344 late Wednesday in North American trade. The euro scaled a high of $1.1499 intraday and a low of $1.1305.

On the economic front, a report from the Labor Department showed first-time claims for U.S. unemployment benefits rebounded, with claims rising to 278,000, an increase of 11,000 from the previous week's revised level of 267,000. Economists expected jobless claims to climb to 290,000 from the 265,000 originally reported for the previous week.

Labor productivity in the U.S. tumbled by 1.8 percent in the fourth quarter following an upwardly revised 3.7 percent jump in the third quarter. Economists expected productivity to edge up by 0.2 percent compared to the 2.3 percent increase reported in the previous quarter.

Meanwhile, the Labor Department said unit labor costs surged up by 2.7 percent in the fourth quarter after falling by a revised 2.3 percent in the third quarter. Labor costs had been expected to climb by 1.2 percent compared to the 1.0 percent drop that had been reported in the previous quarter.

With imports rising and exports falling, a Commerce Department report on Thursday showed U.S. trade deficit to have unexpectedly widened to $46.6 billion in December from a revised $39.8 billion in November -- reflecting the widest deficit since November of 2012. Economists expected the deficit to narrow to $37.9 billion from the $39.0 billion originally reported for the previous month.

German factory orders rebounded at the fastest pace in five months, underpinned by both domestic and foreign demand in December. Factory orders grew a seasonally and working-day adjusted 4.2 percent month-on-month in December, reversing a revised 2.4 percent fall in November, data from Destatis showed Thursday. The latest order growth was the strongest since July, when demand rose 4.8 percent. The growth also exceeded a 1.5 percent rise expected by economists.

Germany's construction sector contracted in January, though at a fractional rate , results of a survey from Markit Economics showed Thursday. The purchasing managers' index for the construction sector dropped to 49.5 in January from 50.5 in the previous month, indicating a marginal contraction.

U.K house prices increased for the third straight month in January, survey data from Lloyds Banking Group's Halifax division showed Thursday. House prices climbed 2.0 percent month-on-month in January, faster than the 1.1 percent rise in the previous month. Economists expected house prices to remain flat during the month.