Oil extends gains on piling positive U.S. data

West Texas Intermediate extended gains to over 2.4% on Thursday as more unexpectedly upbeat U.S. data which surpassed analysts expectations boosted demand prospects in the worlds top consumer. Brent continued to circle around the $109 mark while WTI returned to above $107 levels.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $107.67 a barrel at 14:32 GMT, up 2.51% on the day. Prices ranged between days high at $107.90, the strongest level since July 22, and days low at $105.11 a barrel. Light, sweet crude surged 2.14% on Wednesday following upbeat U.S. and China economic data and erased previous weekly losses, advancing over 2.8% so far this week.

Meanwhile on the ICE, Brent oil for September delivery traded at $109.03 a barrel at 14:33 GMT, marking a 1.23% daily advance. Prices ranged between days high at $109.45, the highest since April 2, and low of $107.53 per barrel. Futures surged 0.95% on Wednesday, extending the current week’s advance to over 1.7%.

Oil prices received a further boost on Thursday following another batch of surprisingly positive U.S. data that beat expectations. The U.S. Department of Labor reported earlier that the number of people who filed for initial unemployment payments decreased by 19 000 to 326 000 in the week ending July 27, beating analysts projections for remaining flat at 345 000 after the previous weeks reading was revised upward by 2 000 from 343 000.

Oil also drew support by overall positive manufacturing PMI readings from key consuming economies. Germanys July Final Manufacturing PMI rose to 50.7, exceeding projections for remaining unchanged at 50.3. And while Frances figure disappointed and fell to 49.7 from Junes 49.8, Italys reading surged to 50.4, compared to analysts expectations for a rise to 49.7 from Junes 49.1 figure. The Euro zones Final Manufacturing PMI also beat anticipations and increased to 50.3, outperforming the forecast to remain flat at 50.1.

Great Britains Manufacturing CIPS also didnt disappoint and surged to 54.6 in July, surpassing projections for a decrease to 52.8 from Junes upward revised reading of 52.9.

To top the pile of positive news, the U.S. ISM Manufacturing index outperformed analysts projections as well and rose to 55.4, the highest since August 2011. This was well above the anticipated jump to 52.0 from Junes 50.9 figure.

Oil also continued to draw support from yesterdays upbeat U.S. data and the decisions of the Federal Reserve, Bank of England and European Central Bank to leave their monetary easing programs unchanged.

Bank of England decided today to leave its base interest rate unchanged at 0.50% and its monetary stimulus at GBP 375 billion. That was followed by a decision by the European Central Bank to also retain its benchmark interest rate at 0.50%. Mario Draghi said the central bank will keep its accommodative monetary policy “for an extended period of time”.

This comes after yesterday the FOMC said in its after-meeting statement that Quantitative Easing will remain untouched for now as persistently low inflation could hinder economic expansion.

“The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term,” the Federal Open Market Committee said.

FOMC’s statement provided overall no new language since its latest meetings on the conditions for maintaining and decelerating the monetary stimulus. Bernanke and his colleagues said that further improvements of the labor market are required, with the Unemployment Rate still unchanged at 7.6% prior July’s reading on Friday. Meanwhile, inflation remained stable and below the central bank’s 2% target, hinting risk of disinflation.

Market players will be keeping a close eye on the remaining U.S. data this week to gauge demand prospects and strength of the dollar. On Friday, U.S. Department of Labor is expected to report that the Unemployment Rate has fallen to 7.5% in July, down from June’s 7.6%. Meanwhile, Non-Farm Payrolls probably declined by 10 000 to 185 000. Apart from the employment data throughout the week, Personal Income, Personal Spending, Average Hourly Earnings and Factory Orders will be released on Friday.