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Crude Steadies; ECB Spurs Buying as Fed Doubts Persist

Thursday, 6 Jun 2013 | 2:27 PM ET
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Crude oil prices rose on Thursday morning after the European Central Bank said it would continue its policy of monetary easing, which sent the euro to a one-month high against the dollar.

ECB President Mario Draghi told a news conference the bank's easy monetary policy "should continue to support prospects for an economic recovery later in the year."

"Draghi's comments came out this morning and you saw a pop in the euro. That's certainly lending support," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania.

Brent crude oil was last hovering just below $104 a barrel. U.S. light, sweet crude last rose more than one percent to trade just shy of $95 per barrel.

Stronger gasoline futures prices were also lending support after government data on Wednesday showed that inventories fell unexpectedly, especially in the densely populated U.S. East Coast, as the summer driving season kicks off, Schork said.

"It's the season for gasoline. The bulls tried to buy that number from the (U.S. Energy Information Administration)."

Gasoline futures were trading 0.78 percent higher at $2.8449 a gallon, after settling at $2.82 on Wednesday.

The U.S. dollar was weakening against the euro. The dollar index was 0.72 percent lower.

Crude oil is priced in dollars. A weak dollar supports higher prices since it makes it cheaper for holders of other currencies to purchase.

Also lending some support was data showing Iranian exports have fallen sharply in recent weeks. The country's crude shipments dropped to just 700,000 barrels per day (bpd) last month, about a third of Iran's oil exports before the current round of sanctions.

Data showing fewer Americans filing new claims for unemployment benefits supported prices, pointing to moderate job growth and more economic activity ahead.

The market awaited government data due on Friday which is expected to show jobs outside the farming sector likely increased by a lackluster 170,000, according to a Reuters survey of economists. The Labor Department will release the May employment report on Friday at 8:30 a.m. EDT (1230 GMT).

But expectations that the U.S. Federal Reserve will roll back its stimulus this year, putting a brake on global economic growth, kept financial markets on edge and helped push Asian shares to 2013 lows on Thursday.

The oil market was also paying some attention to U.S. National Hurricane Center updates on Tropical Storm Andrea, which was headed for the Florida coast.

Crude Oil Inventories Down 6.27M Barrels
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Data showed Iranian exports have fallen sharply in recent weeks with crude shipments dropping to just 700,000 barrels per day (bpd) last month, about a third of Iran's oil exports before the current round of sanctions.

(Read More: Oil to Gain if Hardliner Wins 'Pivotal' Iran Vote)

The United States said on Wednesday it was "deeply troubled" by Iran's plans to start a reactor in 2014 that could yield nuclear bomb material, highlighting concerns about the heavy water reactor Tehran is building near the town of Arak.

U.S. lawmakers are embarking this summer on a campaign to deal an even deeper blow to Iran's diminishing oil sales. Analysts say the ultimate goal could be a near total cut-off.

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