Futures & Commodities

Oil Surges on Supply Worries, Economic Data


Oil prices soared $1.50 to near $95 a barrel on Thursday, supported by supply concerns and better-than-expected economic data from the United States and Japan, the largest and third-largest oil consumers.

Oil Pump

Refinery snags and Venezuela's move to halt sales to Exxon Mobil in the midst of a legal dispute stoked the price run-up.

"A number of supply-driven factors have reminded the market of how thin spare capacity of production really is -- Nigeria, North Sea glitches and geopolitical tension," said Harry

Tchilinguirian of BNP Paribas.

"Added to that, positive surprises in U.S. retail sales and Japanese GDP growth last quarter, and equities and oil markets are better oriented."

U.S. light, sweet crude was higher, after rising as high as $95.44 -- the highest level since Jan. 10. London Brent crude also gained.

Oil and equities also got a boost from Wednesday's U.S. retail sales data, which eased fears of a consumer spending collapse, and much stronger-than-forecast Japanese growth, reported on Thursday.

Japan's economy expanded by 0.9 percent in the fourth quarter, more than double forecasts.

Oil in the United States has been trading in a narrow range near $90 a barrel as fears of a U.S. recession prevent oil from revisiting an all-time high of $100.09 hit on Jan. 3.

Crude stocks in the world's top consumer rose 1.1 million barrels last week, according to U.S. government data, less than the 2.7 million barrels forecast by analysts.

But, while the legal battle between Venezuela and Exxon Mobil escalates, analysts said the move to cut off oil shipments would have little impact on U.S. supplies or the U.S. oil company.

Major oil producers in the Middle East have assured the United States they could compensate for a supply disruption if Venezuela slows exports in its dispute with Exxon, a U.S. official told Reuters on Wednesday.

"The short-term impact will be there, but in the long term, I think, they will aggressively get the capacity from elsewhere and meet their demand," said Justin Wilks, director of trading of the index-based Global Commodities fund group in Australia.

Venezuela will present legal arguments on Thursday in response to temporary court rulings won by Exxon Mobil that freeze up to $12 billion in Venezuelan assets, the country's oil minister said on Wednesday.