New York crude hits 16-month high on brighter US outlook
New York crude oil prices hit 16-month highs on Thursday as traders bet on a brighter outlook for the US economy despite caution from Federal Reserve chief Ben Bernanke.
New York's main contract, West Texas Intermediate (WTI) for delivery in August, jumped $1.35 to stand at 107.85 a barrel -- the highest point since late March.
Brent North Sea crude for September dipped one cent to stand at $108.60 a barrel in late London deals.
"US crude has moved back to a level last encountered in March 2012, as investors buy the black commodity on signs that the US economy is building up a head of steam," said Chris Beauchamp, market analyst at traders IG.
Sentiment was boosted in part by news that fewer people filed new claims for US unemployment insurance benefits last week as the job market slowly improves.
Initial jobless claims fell to 334,000 in the week ending July 13, a drop of 24,000 from the prior week's slightly downwardly revised reading of 358,000, official data showed on Thursday.
US Federal Reserve chief Ben Bernanke has voiced caution over the outlook however, telling Congress on Wednesday that the US central bank had no firm timetable for cutting back on its bond purchases, and that it would consider reducing its stimulus programme only if the economy continued to improve.
"I emphasise that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course," he told the lawmakers. The Fed chief was giving more testimony on Thursday.
Analysts said oil prices would remain supported by signs of stronger demand in the United States, the world's top crude consumer, as well as fears of a disruption in Middle East supply caused by Egypt's political turmoil.
"High demand in the US and the continuing crisis in Egypt are likely to keep prices elevated in the near term," said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas Practice at consultancy EY, formerly Ernst and Young.
The official crude inventories report by the US Department of Energy on Wednesday showed supplies in the United States fell by 6.9 million barrels in the week to July 12.
The drop, which comes during the summer driving season when Americans take to the roads for their holidays, beat the 2.2 million barrels estimated by analysts in a Dow Jones Newswires survey.
"The spread between Brent and WTI narrowed to less than one dollar... as investors continue to revise upwards their expectations about demand in North America," Fawad Razaqzada, technical analyst at traders GFT Markets said on Thursday.
Brent oil prices have historically traded below WTI crude but over the past three years have stayed above the US contract, largely owing to high US stockpiles according to analysts.
In October 2011, Brent traded almost $28 above WTI.
© 2013 AFP