Oil prices open the day Friday in firm rally mode, though the relative range should hold on competing data trends. File photo by John Angelillo/UPI |
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Dec. 8 (UPI) -- An oil-thirsty China and short-term improvements in U.S. labor figures helped put crude oil prices in solid rally territory early Friday.
Crude oil prices have moved between gains and losses for much of the week, but are generally lower for December. Traders have shifted focus away from the OPEC rumor mill to fundamentals following a late November decision on the production cut agreement, which has been credited with setting a $50 per barrel floor under crude oil prices.
The Organization of Petroleum Exporting Countries, with support from countries like Russia, are cutting output through 2018 in order to drain the surplus on the five-year average for global crude oil inventories. A market survey from commodity pricing group S&P Global Platts said OPEC production in November was 32.3 million barrels per day, its lowest level in six months.
The OPEC effort is balanced somewhat by gains in U.S. oil production and the steady release of U.S. oil into the global market. In an emailed market report Friday, London oil broker PVM said supplies are now tested by a surge in demand from China.
"China's thirst for foreign crude surged in November to 9.01 million barrels per day, the second highest on record," analyst Stephen Brennock said in his report.
China is the second-largest economy in the world behind the United States, and its thirst helped drive a rally in crude oil prices early Friday. The price for Brent crude oil was up 1.8 percent as of 9:17 a.m. EST to $63.36 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.8 percent to $57.70 per barrel.
The rally was supported in part by the closure of the Tambar oil field in the North Sea following a fatality reported during regular maintenance on the Maersk Interceptor rig. Tambar has gross reserves of 27 million barrels of oil equivalent.
Elsewhere, the U.S. Labor Department reported total non-farm payrolls increased 228,000 last month. On Thursday, the department said first-time claims for unemployment for the week ending Dec. 2 dropped 2,000 from the previous week to 238,000. The four-week moving average, a less-volatile metric, saw a decline of 750.
Labor numbers from the United States have been held out as signs of robust economic growth. Digging deeper into the figures, however, and the Labor Department said most of the gains in November came from the 15.9 percent surge in the hiring of teenagers as most other segments remained steady.
"Employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016," the Bureau of Labor Statistics added Friday.
Friday's rally will be tested when drilling services company Baker Hughes releases its weekly rig count report. A gauge of exploration and production trends, gains, particularly in the United States, could present a headwind for the price of crude oil.
Brennock in his report noted recent sessions were characterized by wild swings, but actual prices haven't moved much since last week.
"As much as this will be cheered by market bulls, the current push and pull of OPEC cuts and rising U.S. output will keep oil prices pinned in their current trading ranges," he said.
