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UPDATE 6-Brent crude oil edges up with economic sentiment

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Published: Thursday, 31 Jan 2013 | 11:53 AM ET
By: Gabriel Debenedetti

* Brent crude oil prices near three-month high

* Fed's promise to keep spending supports demand outlook

* Euro zone economic sentiment rises for a third month

(Recasts with updated prices, market activity; changes byline and dateline, pvs LONDON)

NEW YORK, Jan 31 (Reuters) - Brent crude oil prices edged higher on Thursday, briefly touching a three-month high, as traders weighed mixed economic data from the United States and Europe.

The international benchmark rose to $115.25 a barrel, the highest level since mid-October, before retreating as U.S. crude and gasoline futures sank.

The market was balancing U.S. data showing unemployment benefits claims rose last week against positive euro zone sentiment data from Wednesday and U.S. Federal Reserve comments that it would maintain its stimulus plan until the economic outlook improves substantially.

Investors have been closely watching economic data from top consumers for signs that struggling fuel demand will improve.

"The oil complex, over the last one or two weeks, has moved back in sync with what's happening with the economy," said Dominick Chirichella, senior partner at Energy Management Institute in New York.

U.S. RBOB gasoline futures led losses in the oil complex, dropping 1 percent after 10 days of gains ahead of the expiration of the front-month contract later Thursday.

Market players said oil price movements could be limited until Friday's release of U.S. nonfarm payrolls data and official manufacturing data out of China, which is expected to show factory activity picking up pace.

"We see persistent macro-driven trading for oil with much attention paid to the U.S. non-farm payrolls report tomorrow," said VTB Capital oil strategist Andrey Kryuchenkov.

Brent was up 18 cents cents at $115.08 a barrel at 11:40 a.m. EST (1640 GMT) after earlier hitting $115.25, the highest level since Oct. 16.

U.S. crude was down 75 cents at $97.19 after reaching a more than four-month high on Wednesday.

The S&P 500 was down 0.27 percent near the end of a strong starting month of the year.

RBOB gasoline futures traded down nearly 1 percent at $3.0100 a gallon after 10 days of gains that pushed the front-month up more than 12 percent.

"Gasoline is just retracing a little bit from a bit much of an over-reaction yesterday. I don't think the inventories were signaling that we're going to have a shortage of gasoline anytime soon," Chirichella said, referring to a stockbuild in the East Coast last week reported by U.S. Energy Information Administration on Wednesday.

SUPPLY TENSIONS

Supply worries stemming from tensions in the Middle East continued to underpin prices for international benchmark Brent.

Syria warned on Thursday of a possible "surprise" response to an Israeli attack on its territory, and Russia condemned the strike as an unprovoked violation of international law.

Tension over Iran's uranium enrichment plan continued to bubble after a plan to upgrade its refining equipment was delivered to the U.N. nuclear agency.

Such a step could enable Iran to refine uranium faster than it can at the moment and increase concerns in Western states and Israel about the goals of Tehran's nuclear program, which they fear has military aims. Iran says its work is peaceful.

(Additional reporting by Jessica Donati in London and Jessica Jaganathan in Singapore; editing by William Hardy; and Peter Galloway)

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NEW YORK, Jan 31- Brent crude oil prices edged higher on Thursday, briefly touching a three-month high, as traders weighed mixed economic data from the United States and Europe. The international benchmark rose to $115.25 a barrel, the highest level since mid-October, before retreating as U.S. crude and gasoline futures sank.

   
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