Crude Advances As Weak US Data Lifted Stimulus Bets

Crude oil advanced further on Thursday as the weak US economic data eased concerns the U.S. Federal Reserve will soon reduce its monetary stimulus, while a report from the Energy Information Administration (EIA) showed that US refiners boosted crude operating rates.

Worries over the Federal Reserve reducing its monetary stimulus soon eased after the US government slashed its estimate of first-quarter economic growth to a 1.8% annual rate, down from a previous estimate of 2.4% as personal consumer fell to 2.6% from 3.4%.

Also providing support to oil prices was an EIA report showing that US refiners boosted crude processing to the highest rate this year operating at 90.2% of capacity last week even as stockpiles rose, while in China industrial profits increased 15.5% in May.

- Crude is trading around $95.98 a barrel after rising $0.48

- Brent is trading around $102.20 a barrel after rising $0.54

However, weighing on prices is the rise in US crude stockpiles by 18,000 barrels last week to 394.1 million despite the start of the driving season. Gasoline inventories rose 3.7 million barrels while distillate supplies were up 1.6 million barrels last week.

Investors are now turning their attention to the US nonfarm payrolls data due next week for further signs on the direction of the economy. As for today, markets will focus on Germany’s employment report, UK’s GDP, eurozone’s confidence and the US’s jobless claims.

The continued tensions in the Middle East also provide support to oil prices amid worries from possible supply disruptions. The Wall Street Journal reported that the US is planning to arm Syrian rebels within a month.

- Natural gas is trading at $3.736 per cubic feet after falling 0.03%

- Gasoline is trading at $2.7363 a gallon after rising 0.21%

- Heating oil is trading at $2.8642 a gallon after rising 0.35%