Brent crude oil futures rose on Thursday, ending at a five-week high on worries about tighter supplies following a lockout of striking oil workers in Norway and hopes that some policy-easing steps by some central banks would improve oil demand. China made a surprise move to cut interest rates to bolster slowing economic growth in the No 2 oil consumer, and the Bank of England undertook another round of monetary stimulus.
Brent hit a session high above $102 a barrel. Then the European Central Bank cut its main interest rate to 0.75 percent and the euro slid against the dollar, pulling Brent off that high. The US government reported that crude oil inventories fell more sharply than expected last week, initially helping extend Brent's gains and pare losses for US crude. But analysts said the decline was not enough to push prices much higher, with US crude supply remaining more than 24 million barrels above last year's level.
Norway's oil companies, including Statoil, called a lockout in a bid to end a strike by offshore oil and gas workers by possibly inducing government intervention. Norway's labour ministry declined to say whether it would intervene but said a lockout was legal. In London, August Brent crude closed at $100.70 a barrel, gaining 93 cents, the highest settlement for front-month Brent since the May 31's finish at $100.87.
"You are getting a very strong 'sell the fact' move off these global rate moves this morning," said Mike Guido, managing director of hedge fund sales and energy markets at Macquarie in New York. Front-month Brent prices are up nearly 13 percent from June 21, when Brent closed below $90 a barrel, an 18-month low. But they are still down 21 percent from it's year's high of $128.40 struck March 1.
US August crude closed at $87.22 a barrel, falling 44 cents, after rising early to a session high of $88.98. Front-month US crude has risen more than 12 percent from the eight-month settlement low of $77.69 on June 28, but is 21 percent below its 2012 closing high of $110.55 hit in March.
US crude oil inventories fell 4.27 million barrels last week, according to the weekly report from the US Energy Information Administration. A Reuters poll had forecast a 1.9 million-barrel decline. "The (EIA) report is bullish, although its effect may be fleeting, due to the fact that a factor in the crude oil decline was much lower imports, which were impacted by Tropical Storm Debby," said John Kilduff, partner at Again Capital LLC in New York.
Gasoline inventories rose less than expected while distillate stockpiles, which include heating oil and diesel fuel, dropped 1.05 million barrels, against the forecast for a 600,000-barrel increase, the EIA report also showed. Brent's premium against US crude rose 46 cents to $13.48 at the close, from Tuesday's $13.02, as the EIA data showed that crude stocks at the US delivery point in Cushing, Oklahoma, rose last week by 225,000 barrels to 47.64 million barrels.
Trading volumes perked up, with Brent rising 35 percent above its 30-day average, while US crude rose 13 percent over its 30-day average, according to Reuters data. US economic data showed that the US service sector, a major component of the economy, slowed to a 2-1/2-year low in June as new orders dropped, pressuring US crude futures in post-Independence Day holiday trading.
Investors shrugged off data showing that private employers added 176,000 jobs in June, according to payrolls processor ADP, more than economists had forecast. Another set of data showed US jobless claims fell last week from a revised higher number in the previous week. Norway's oil industry moved to lock out all offshore workers on the Norwegian continental shelf. The aim was to get the government to intervene to put an end to a near two-week strike that has hit crude exports and helped push up prices.
While a lockout would mean a complete shutdown of oil and gas production in Norway, the world's No 8 crude exporter, analysts expected the government to intervene, end the strike and prevent a full closure. Some 6,515 workers will be locked out from their workplaces with effect from July 10. The strike began on June 24 and has slowed Norway's crude exports, cut its oil production by around 13 percent and its gas output by around 4 percent. State-controlled Statoil said the lockout would cause a production shortfall for the company of around 1.2 million barrels of oil equivalent (boe) per day.
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