WTI erases U.S. labor data drop and heads towards weekly gain (Updated)

WTI crude is headed for a first weekly gain since four weeks after Crude Oil Inventories surprisingly contracted this week and employment rose more than projected in the worlds biggest economy.

According to the Bureau of Labor Statistics, the Change in Non-Farm Payrolls indicator rose to 175 000, 12 000 more than the 163 000 projection and significantly above the revised 149 000 value for April. The Unemployment Rate surpassed forecasts by 0.1% and stood at 7.6%, also 0.1% higher than last months figure.

On the New York Mercantile Exchange, WTI crude for July delivery traded at $94.03 a barrel at 13:20 GMT, down 0.77% on the day. Prices jumped to $95.30 a barrel 15 minutes before U.S. labor data was published and stood at $95.21 at 12:34 GMT, after which oil slipped below $94 a barrel.

Amrita Sen, chief oil market analyst at Energy Aspects Ltd. commented for Bloomberg: “The U.S. recovery has been broadly on track so far. The labor market is healing and the economy is slowly getting better.”

Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts said for Bloomberg: “You’ve got this effect that good economic news means the end of stimulus is getting closer, therefore people are selling off. People believe that oil prices have already gained enough and now they are taking profit.”

According to a Bloomberg survey, WTI may drop next week. Among 34 analysts interviewed, 41% projected prices will fall up to June 14, 35% predicted a gain and the rest expect no change.

Brent oil was also pressured by the strengthened dollar today and slipped 0.61% for the day, standing at $103.02 per barrel at 13:31 GMT. The European benchmark traded at $104.23 four minutes after U.S. jobless data was published, but lost around $1 following the greenbacks rally against all its major peers.

Oil prices were strongly supported by a surprising plunge of the Crude Oil Inventories indicator in the U.S. According to the Energy Information Administration’s report, U.S. crude reserves dropped surprisingly by 6.267 million barrels in the week ending June 2. This is a significant decrease, compared to the preceding week’s 3 million barrels gain. Final value mismatched forecasts of an 800 000 barrel decline, which caused WTI crude prices to surge above $94 per barrel and Brent oil surpassed $104.

U.S. gasoline stockpiles also fell by a seasonally adjusted annual rate of 366 000 barrels, compared to a decrease of 1.541 million barrels during the week ending May 26. Final estimates missed forecasts of a 1 million barrels increase in gasoline reserves.

(Update) Oil prices erased drops, which followed the Bureau of Labor Statistics report. On the New York Mercantile Exchange, WTI crude for July delivery traded at $95.75 per barrel at 17:20 GMT near the session high of $95.78.

Brent oil for July delivery also rebounded, gaining 0.83% on the day. The European benchmark stood at $104.48 at 14:25 GMT,following a session high at 14:20 GMT when it traded at $104.51 per barrel.