Oil jumps $2 a barrel

Oil rose more than $2 to above $83 a barrel on Wednesday, up from a near-week's low in the previous session, with positive US economic data and pre-Thanksgiving holiday short-covering providing support. Weekly US inventory data from the Energy Information Administration showed an unexpected rise in crude stocks last week as imports surged, but the market shrugged off the number and crude popped up after the report was released.
US crude rose $2.05 to $83.30 a barrel by 11:44 pm EST (1644 GMT). It fell to $80.28 intra-day on Tuesday, the lowest price since November 17 after North Korea fired artillery at South Korea in one of the heaviest attacks since the 1953 cease-fire. Brent crude rose $2.10 to $85.35. "It didn't seem like the inventory data moved the market at all," said Richard Ilczyszyn senior market strategist at Lind-Waldock in Chicago. "This is a short cover; we have problems in Korea and elsewhere and traders do not want to go home short ahead of the weekend."
US crude stocks rose 1.03 million barrels to 358.6 million barrels in the week to November 19 while crude imports expanded by 1.16 million barrels per day (bpd) to 8.99 million bpd, the data showed. Analysts polled by Reuters had expected crude stocks to fall 2.1 million barrels. Stocks of gasoline were up 1.91 million barrels to 209.6 million barrels, versus expectations for a 600,000-barrel draw. Distillate stocks fell by 541,000 barrels to 158.25 million barrels, compared with analyst expectations for a larger 1.2 million-barrel draw.
More US economic data depicted a mixed recovery scenario. Traders mentioned the weekly US unemployment benefit claims which dropped, signalling an improving labour market, while consumer spending rose for the fourth consecutive month in October. But new orders for US manufactured goods fell unexpectedly, showing the largest decline in almost two years. The euro turned negative against the US dollar as Treasury bond yields rose. Increasing investor risk-aversion has seen oil prices fall about 8 percent since reaching a 2010 high of $88.63 on November 11.
"Prices are being influenced by Ireland and eurozone debt issues, concerns about whether China is going to overtighten as it tries to fight inflation and last but not least the situation between North and South Korea," Societe Generale's global head of oil research Mike Wittner said.
"Markets are jittery and there is the Thanksgiving weekend, so volumes will be light and prices could be volatile," he said. MF Global analyst Edward Meir predicted the dollar's rally could go further, weighing on oil and pushing it below $80. "Further strengthening here could come back and knock energy prices with more authority next time around, possibly taking prices through technical support of $79.50," Meir wrote in a report.