07 February 2014, News Wires – Brent crude edged higher toward $108 a barrel on Friday, on track for its second weekly gain in three with investors awaiting US non farm payrolls numbers for signs of economic growth in the world’s largest oil consumer.
“The outlook for the US economy is one of the most important indicators for oil demand at the moment, and numbers outside of expectations could move prices in either directions,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Further signs of economic growth in the US could prompt the Federal Reserve to curb its monetary stimulus programme, which has helped support risky assets such as commodities.
“I think the market will be fairly tolerant and not really think in terms of tapering unless we see very good or very bad numbers,” Spooner said.
Brent crude for March delivery was up 18 cents at $107.37 early on Friday, after a stronger euro, French port closures and tighter supplies from the North Sea pushed the benchmark up 91 cents in the previous session.
US crude was down 13 cents at $97.71, after settling 46 cents higher. The benchmark has in recent weeks drawn support from snow and ice storms in the US Northeast, which boosted demand for heating fuels, but the upside has since been limited by expectations of lower demand during peak maintenance season.
Brent’s premium to the US benchmark rose to $9.66 a barrel. The spread fell to $7.94 a barrel on Wednesday, the tightest since 10 October.
Oil prices were supported by a drop in applications for US unemployment benefits last week, in a hopeful sign that the upcoming jobs report due later on Friday will put to rest concerns about the broader economy and demand for oil.
A Reuters poll points to a recovery in US jobs growth to 185,000 in January from a measly 74,000 in December.
Tighter supply of North Sea crude in March could support the Brent benchmark. Loading of the four crude streams Brent, Forties, Oseberg and Ekofisk (BFOE) will average 890,000 barrels per day in March, down from an expected 1.03 million bpd in February, according to loading programmes.
Oil prices are also expected to be supported by peak refinery maintenance season as a slew of refiners in the US and Asia will shut down units in the second quarter.
Investors will also keep a close eye on Saturday’s talks with Iran as the UN nuclear watchdog hopes to persuade the Islamic state to finally start addressing long-held suspicions it has worked on designing an atomic bomb.
Tough international sanctions over the past two years have cut Iran’s oil exports in half. However, Japan this week became the first of Iran’s oil buyers to make a payment for crude imports under an interim deal that grants Tehran limited sanctions relief in exchange for steps to curb its nuclear programme.