Crude oil prices on the rise early Thursday on strong demand indicators, but could soon be brushing up against a ceiling. File photo by Monika Graff/UPI |
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Aug. 3 (UPI) -- Strong employment figures and signs of increasing U.S. demand offset low inflation in the OECD to push crude oil prices higher early Thursday.
Private payroll processor ADP reported Wednesday that private sector employment increased from June to July by 178,000, with the services sector far outpacing manufacturing. Ahu Yildirmaz, a research director for ADP, said job growth is entrenched, but the labor market was getting tighter, making it hard for employers to find qualified workers.
After a record-setting day for the Dow Industrial Average, official data from the U.S. Labor Department could keep the bulls in charge. First-time claims for unemployment for the week ending July 29 were down 5,000 from the previous week and the less-volatile four-week moving average declined 2,500.
That followed indicators of strong U.S. demand, with the U.S. Energy Information Administration reporting gasoline inventories dropped 2.5 million barrels from the previous week.
"In the near term, there are several bullish factors to support current prices," Jenna Delaney, a senior oil analyst at PIRA Energy, a forecasting and analytics unit of S&P Global Platts, said in an emailed report. "Crude oil inventories have [also] fallen at a stronger than usual clip during the summer months, and have been below year-ago levels for three consecutive weeks."
The price for Brent crude oil was up 0.63 percent at 9:15 EDT to $52.70 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.5 percent to $49.84 per barrel.
The rally may be muted by data from the Organization for Economic Cooperation and Development that show inflation is weakening among major world economies. Among the Group of Seven leading economies, inflation picked up only in Germany.
Inflation slowed from 1.9 percent to 1.6 percent in the United States, dropping further away from the goal of the U.S. Federal Reserve of 2 percent. That came even after the milestone close above 22,000 for the Dow after Wednesday's close.
Delaney warned the rally may be brushing up against a ceiling, meanwhile.
"U.S. production continues to grow at a steady clip, and early estimates of OPEC production are indicating volumes were higher during July month on month," she said.
