Brent oil rises on improving US labor market data

NEW YORK: Brent crude prices edged up on Thursday as stronger-than-expected US economic data suggested improving demand for oil, also supportive was investor confidence that major central banks would keep working to support the global economy.

In a sign of strength in the US labor market, the world's largest oil consumer, the number of Americans filing new claims for unemployment benefits fell more than anticipated last week.

Brent crude for April delivery gained 34 cents to $112.21 a barrel by 1:22 p.m. EST (1822 GMT), having earlier risen to $112.57. It fell to a low of $111.65 on Wednesday, its weakest since Jan. 22.

The benchmark crude is still on track for its steepest monthly drop since October, having declined by about $7 a barrel in the last three weeks. So far, however, it remains above its 100-day moving average at $111.69, a key indicator of market sentiment closely watched by traders.

US oil slipped 10 cents to $92.66 a barrel and is on course for a drop in February after three straight monthly gains.

The March RBOB gasoline contract rose ahead of expiration. RBOB had led Brent lower on Wednesday, dropping more than 12 cents. It was up more than 4 cents on Thursday, with the contract for April delivery also rising by around 4 cents a gallon to roughly $3.14.

"After the washout in March RBOB gasoline, we're seeing a last-minute bounce ahead of the expiration," said Timothy Evans, analyst for Citi Futures Perspective, though he said it was too early to say whether selling had run its course.

In addition to the unemployment data, Commerce Department numbers showed the US economy grew by a weaker-than-expected 0.1 percent in the fourth quarter, although import and export figures beat expectations.

On Wednesday, his second day of congressional testimony, US Federal Reserve Chairman Ben Bernanke defended the central bank's monetary policy and bond-buying stimulus program designed to support the economy.

Strong domestic demand for Italian debt in a Wednesday sale eased previous worries about the country's political deadlock after its election, and helped boost appetite for risky assets such as oil.

European Central Bank President Mario Draghi reiterated on Wednesday the ECB would continue injecting liquidity into markets.

Oil had hit its lowest since January on Wednesday after data showed US crude stockpiles rose for a sixth straight week , but a more optimistic growth outlook after Draghi's and Bernanke's comments brought investors back.

Market watchers also maintained longer-term worries about the US economy, particularly given the ongoing political deadlock over the budget and automatic spending cuts known as "sequestration."

Without a deal from the White House and Congress, $85 billion will automatically be slashed from the budget from Friday, which President Barack Obama warned could shave at least 0.6 percentage point off economic growth.

Crude oil prices are forecast to fall this year due to weak demand in many industrialized nations and improving global supply, according to analysts in a Reuters poll.

In a monthly survey of 27 analysts, the consensus forecast was for Brent crude to average $110.10 per barrel in 2013, down from an average of $111.70 last year. But the 2013 forecast was up slightly from last month's $109.70.