Crude oil futures rose by more than $1 per barrel on Thursday, boosted by positive US economic data and surging gasoline prices as demand was expected to rise with the holiday driving season. Investors were also eyeing talks between Western powers and Iran on hopes of an accord over its nuclear program. US gasoline prices rose by more than 2 percent, boosting the entire crude oil complex. Rising demand met with refinery outages in Europe and the United States, tightening supplies.
"This is a refinery capacity situation that is further challenged as we come into a very strong demand period," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania. Brent crude rose $1.40 to $109.46 a barrel by 1:38 pm EST (1838 GMT), after hitting a high of $109.57. The contract breached the 100-day moving average of $109.36 for the first time in three weeks.
US oil rose $1.44 to $95.29 a barrel, after reaching a high of $95.63. US gasoline futures for December delivery were up 2.13 percent, or by close to 6 cents a gallon, to $2.7197, after hitting a high of $2.7234. The contract was on track for its biggest one-day percentage gain in six weeks. The January/February gasoline contracts were backwardated, meaning front-month prices rose higher than the months further out, indicating tight supplies.
Refinery outages in the United States supported prices. In Europe, the gasoline-making unit at Total's 360,000-barrel per day (bpd) refinery in Antwerp, Belgium, was offline after an explosion on Tuesday that killed two. Gasoline stocks at Europe's Amsterdam-Rotterdam-Antwerp hub dropped 28.2 percent from last week to the lowest level this year.
Rising prices on both sides of the Atlantic narrowed Brent's premium over US crude oil by as much as 65 cents to $13.56 per barrel earlier in the day. The spread was last trading at $14.21. The number of Americans filing new claims for unemployment benefits fell more than expected last week, while the US Manufacturing Purchasing Managers Index rose to the highest level since March, suggesting a strengthening economy.
Investors were waiting to see US data to gauge the health of the US economy and for hints on whether the US Federal Reserve will scale back its economic stimulus after talk of tapering resurfaced this week. Any sign of a pullback in policy would cut oil demand and weigh on prices. "The manufacturing data feeds into the Fed's thinking but if they set themselves a threshold of 6.5 percent unemployment to be reached before an eventual taper takes place, that's what you have to be looking for," said Harry Tchilinguirian, head of commodity market strategy at BNP Paribas.
In Geneva, France and Iran traded tough words on Thursday as major powers struggled to finalise an interim deal to curb Tehran's nuclear program in exchange for sanctions relief, with Paris urging the West to remain firm and Tehran deploring a loss of trust.
Sanctions against Iran have kept 1 million barrels of oil per day from the market, and any indication that an agreement would be reached could mean lower prices as Iranian oil supplies would become available.
Lower distillate stocks in the US were also helping to support Brent after the front-month gas oil futures in London flipped into backwardation, according to Christopher Bellew, analyst at Jefferies Bache brokerage in London said. The December/January gas oil spread flipped into a slight backwardation, following US government data that showed low heating oil stocks in the United States, which traders expect will mean greater refining demand.
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