Crude Oil Rallies To End Higher After Jobs Data

(RTTNews) - U.S. crude oil rallied from a 17-month low to end higher Thursday, after some upbeat economic news from the U.S. showed initial claims for unemployment benefits to have dropped more than expected last week. Nonetheless, the uptick in oil prices were somewhat limited with the dollar weakening against a select band of currencies.

Demand growth prospects for oil improved after first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended September 27, a report from the Labor Department showed Thursday. Investors now await further cues on the strength of recovery in the labor market with the non-farm payrolls data due Friday.

Meanwhile, the European Central Bank made no changes to interest rates as expected, at its monthly policy meeting in Naples, Italy. The central bank had reduced interest rates in a surprise move last month, with economic momentum in the euro area remaining subdued.

Crude oil prices dropped below $90 for the first time in 17 months to a low of $88.18 a barrel Thursday morning, extending recent losses amid mounting worries over a supply glut despite an unexpected drop in U.S. crude stockpiles.

A slowdown in China and some disappointing economic data out of the U.S. and Europe have raised prospects of a significant drop in oil demand.

The recent report from the Organization of Petroleum Exporting Countries that showed a notable increase in crude production in September and rising output levels in Libya also contributed to oil's decline.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, gained $0.28 or 0.3 percent to close at $91.01 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for November delivery scaled a high of $91.32 a barrel intraday and a low of $88.18.

On Wednesday, crude oil futures ended lower after the dollar continued to strengthen on some upbeat private jobs data from the U.S., notwithstanding some disappointing U.S. manufacturing data.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.51 on Thursday, down from its previous close of 85.91 late Wednesday in North American trade. The dollar scaled a high of 85.90 intraday and a low of 85.50.

The euro trended higher against the dollar at $1.2677 on Thursday, as compared to its previous close of $1.2624 late Wednesday in North American trade. The euro scaled a high of $1.2690 intraday and a low of $1.2616.

In economic news from the U.S., a Labor Department report showed initial jobless claims to have declined to 287,000 in the week ended September 27, a decrease of 8,000 from the previous week's revised level of 295,000. Economists expected jobless claims at 297,000 from the 293,000 originally reported for the previous week.

A Commerce Department report earlier in the day showed factory orders to have pulled back by a more than expected 10.1 percent in August, after having jumped 10.5 percent in July. Economists expected orders to drop by about 9.3 percent.

The European Central Bank today left its refinancing rate at a record low of 0.05 percent and the deposit rate at - 0.20 percent, in line with expectations, after reducing them in a surprise move last month. The marginal lending rate too has been maintained at 0.30 percent.

Eurozone's producer prices declined in August at a faster rate than expected, a report from Eurostat showed Thursday. Producer prices dropped 1.4 percent year-over-year in August, more than the 1.2 percent fall predicted by economists. In July, producer prices had decreased at a revised 1.3 percent.