WTI gains on positive U.S. data

West Texas Intermediate surged above the $107 mark during the early U.S. session as the Labor Department reported a drop in people who filed for unemployment benefits, indicating economic recovery. The Philadelphia Fed Index also surpassed expectations.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $107.26 a barrel at 14:12 GMT, up 0.85% on the day. Prices held in range between days high of $107.43, 2 cents below the recently hit 16-month high and and low of $105.94 per barrel respectively. Light, sweet crude surged 0.6% yesterday, extending the current weeks advance to over 0.5%.

Meanwhile on the ICE Futures U.S. Exchange, Brent oil for September delivery traded at $108.64 per barrel at 14:16 GMT, marking a 0.02% daily gain. Prices varied between days high and low of $108.74 and $108.04 per barrel respectively. The European Benchmark rose 0.7% on Wednesday but has declined more than 0.4% so far this week.

West Texas Intermediate erased earlier daily losses during early American trading as upbeat U.S. unemployment data pointed at a stable economic recovery, thus boosting demand prospects in the worlds top consumer. The U.S. Labor Department said in its report at 12:30 GMT that fewer people than expected filed for unemployment benefits last week, compared to the previous one. Initial Jobless Claims during the week ending July 13 fell to 334 000, exceeding expectations of a drop to 345 000 from the preceding weeks downward revised reading of 358 000.

The four-week moving average fell by 5 250 to 346 000, down from the previous weeks revised average of 351 250.

Meanwhile, Philadelphia Fed Index also surprised market players. The indicator surged to 19.8, surpassing analysts projections for a drop to 8.0 from Mays 12.5 reading.

Oil prices also remained supported after yesterday  the Energy Information Administration said in its weekly report that U.S. crude oil inventories fell for a third straight week, the longest run this year. U.S. refineries processed the most crude in eight years. Reserves fell by 6.9 million barrels to 367.0 million in the week ending July 12, placing them in the upper half of the average range for this time of the year. Refineries operated at 92.8% of their operable capacity last week, the highest this year. Crude stockpiles at Cushing, Oklahoma, the delivery point for futures traded at the New York Mercantile Exchange and biggest U.S. storage hub fell by 882 000 barrels to 46.1 million.

Gasoline production decreased, while distillate fuel output increased, averaging 9.0 million and 5.1 million barrels per day respectively. U.S. gasoline stockpiles added 3.1 million barrels last week, standing well above the upper limit of the average range for this week of the year. Distillate fuel inventories increased by 3.9 million and were in the lower half of the average range.

The Energy Information Administration’s report confounded analysts’ expectations, extending the all-time record high 20.2 million barrels drop to 373.9 million in the 14 days ending July 5. According to a Bloomberg survey, the EIA should have reported crude reserves have fallen by 2 million barrels last week. Gasoline inventories were supposed to drop by 1.5 million barrels, while distillate fuel inventories were expected to have risen by 1.5 million barrels.

Meanwhile, investors remained focused on Ben Bernankes second day of testimony before the Senate Banking Committee. On Wednesday, he stated that the central bank still expects to start winding down its monetary easing program by the end of the year and bring it to an end by mid-2014, if the required recovery signs are at hand. However, he left open an option for changing that plan if the economic situation shifts towards negative.