Oil prices rally on upbeat US economic data

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World oil prices jumped Thursday on the back of positive economic data and signs of improving demand in the United States.

Brent North Sea crude for August rocketed as high as $118.08 per barrel, the highest point since June 15. It then slipped back to $117.28, up a hefty $3.66 from Wednesday's closing level.

New York's main contract, West Texas Intermediate for delivery in August, jumped to $99.42, before pulling back to $98.19, up $1.54 on the day.

Payrolls firm ADP said that private businesses, excluding the farm sector, added 157,000 jobs in June, a solid jump after the tepid 36,000 increase in May.

The US Labor Department said meanwhile that unemployment claims fell to 418,000 in the week to July 2, from 432,000 a week earlier.

Both figures were better than expected but neither was stellar -- the ADP figures were still off the 200,000 monthly pace seen in the first quarter.

The positive data raised hopes over Friday's all-important US non-farm payrolls (NFP) data for June.

"Brent rallied on the bullish ADP employment change numbers, a good indicator prior to (Friday's) US non-farm payrolls," SEB commodities analyst Filip Petersson told AFP.

"A recovery in NFP, after last month's sharp drop, would strengthen US demand expectations."

Prices also found support after the US Department of Energy (DoE) announced that gasoline (petrol) reserves fell 600,000 barrels in the week ending July 1.

That confounded expectations for a gain of 200,000 barrels, according to analysts polled by Dow Jones Newswires, and indicated stronger demand.

Crude inventories, however, were down 900,000 barrels last week, well short of forecasts for a 2.4-million-barrel drop.

"The overall picture ... is a bullish crude market taking every opportunity to move higher," Petersson said.

"Both short- and long-term supply tightness worries are lurking in the background. However, the Brent rally may have gone a bit too far today."

The weekly DoE report was published one day later than usual owing to the Independence Day holiday on Monday.

On Wednesday, oil prices slipped in New York but steadied in London amid concerns that the eurozone debt crisis and another hike in Chinese interest rates could lower global energy demand.

Beijing raised interest rates for the third time this year as it fights to tame inflation.

© 2011 AFP

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