GO
Loading...

UPDATE 3-Brent climbs above $111, U.S. jobs in focus

Friday, 6 Dec 2013 | 5:16 AM ET

* U.S. economy grows faster than expected

* Price gains limited by worries over Fed tapering

* Severe weather cuts oil production in Europe, U.S.

* Coming up: U.S. nonfarm payrolls at 1330 GMT

(Updates prices, previous SINGAPORE)

LONDON, Dec 6 (Reuters) - Brent crude rose above $111 a barrel on Friday after a two-day drop, as severe weather cut oil output in Europe and the United States, and with traders waiting for a U.S. jobs report.

Aiding Brent's rise was data on Thursday that showed the U.S. economy grew faster than initially estimated in the third quarter, suggesting oil demand could improve in the world's top consumer.

"Weather-related production outages are lending support to the oil prices," said Commerzbank.

Brent was up 57 cents at $111.55 a barrel at 1007 GMT, while U.S. crude was off 15 cents at $97.23 a barrel, after rising 18 cents on Thursday and touching a five-week high just shy of $98 a barrel.

The contract, buoyed by a drop in U.S. crude stockpiles after a 10-week increase, has gained 5 percent this week and is on track for its best weekly showing in five months.

The gains, though, were curbed by speculation that positive economic data would prompt the U.S. Federal Reserve to start unwinding its bond-buying programme, which could reduce support for riskier assets such as oil and other commodities.

"GDP numbers were strong, so that makes us more comfortable about a recovery in the U.S. economy," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

"But once tapering starts, that's probably time for people to take profits and get out of risk assets, including oil."

Oil prices were supported by severe weather in parts of Europe and the United States.

North Sea oil producers cut output and moved staff from some platforms as a major storm blasted towards mainland Europe in what meteorologists warned could be the worst storm to hit the continent in years.

Cold weather has also dented some oil and gas production in the United States and could further crimp output in top crude-producing states like Texas and North Dakota.

The U.S. Commerce Department on Thursday revised third-quarter GDP growth sharply upwards. Weak demand and a pile-up in business inventories, however, buoyed the case for the Fed to keep buying bonds for now.

The focus will now be on U.S. nonfarm payrolls for November due at 1330 GMT for further signs of economic growth.

The rally in WTI over the past week caused Brent's premium to the U.S. benchmark to narrow by almost $5 to $13.89 per barrel, after the spread last week reached its highest since March.

(Additional reporting by Jacob Gronholt-Pedersen in Singapore; Editing by William Hardy)