05 July 2013, News Wires – Brent crude held above $105 a barrel on Friday and was on course for its strongest weekly gain in a month, ahead of key US jobs data that could bolster confidence in recovery in the world’s largest oil consumer.
The US is expected to have created more jobs as its economyrecovers, lifting its fuel demand outlook. But such news could also strengthen the greenback and make dollar-denominated commodities like oil more expensive for holders of other currencies.
Investors are also on edge over when the Federal Reserve will roll back its bond-buying programme, which has boosted liquidity in global markets.
“Tonight will be a good test of the residual interest in oil,” said Michael McCarthy, chief market strategist at CMC Global Markets in Sydney. “Oil should rise because of the broader economic performance.”
Brent crude for August delivery was down 14 cents at $105.40 early on Friday, after settling down on Thursday for the first time this week as supply concerns in the Middle East eased following the ouster of Egypt’s president. Front-month prices have gained 3.2% so far this week, the largest weekly rise since the first week of June.
US crude futures fell 30 cents to $100.94 a barrel, but remained on track for their biggest weekly climb since April after closing at a 14-month high on Wednesday. There was no settlement on Thursday due to a holiday in the US.
“With technical support and stronger fundamentals, there is no reason to be selling oil,” McCarthy said, pointing to Wednesday’s data that showed a large drawdown on US crude stockpiles last week.
West Texas Intermediate (WTI) crude futures could consolidate and then test resistance levels between $106 and $108 a barrel, he said.
As WTI raced ahead, Brent’s premium to the US benchmark fell to its lowest since December 2010 on Wednesday.
“It’s interesting how the spread between WTI and Brent continued to narrow despite supply concerns in Europe,” McCarthy said.
Clear signals of looser policy ahead from central banks in the UK and Europe on Thursday may lure investors back to riskier assets such as oil, he said.
The toppling of Egyptian President Mohamed Mursi divided the Middle East on Thursday, with Tunisia’s ruling Islamists denouncing it as a coup while Gulf Arab leaders celebrated.
“We do not expect the political situation, even in flux, to undermine oil supply or transit in Egypt,” BNP Paribas analysts said in a note.
The uprising has not affected operations at Egypt’s Suez Canal, a vital waterway for oil shipments.
Elsewhere, seaborne oil exports from Opec, excluding Angola and Ecuador, will rise by 540,000 barrels per day in the four weeks to 20 July, an analyst who estimates future shipments said.