Oil gets boost from fall in US unemployment, drop in crude stocks

Oil prices rose slightly on Thursday after data showed a fall in US unemployment and a sharp drop in crude stockpiles, although concerns that a spike in US coronavirus infections could stall a recovery in fuel demand kept gains in check.

US non-farm payrolls increased by 4.8 million in June, the Labour Department reported on Thursday, beating expectations.

Brent crude LCOc1 futures were up $0.45 or 1.07% at $42.48 a barrel by 1448 GMT, after rising 1.8% in the previous session.

US West Texas Intermediate (WTI) crude CLc1 futures rose $0.38, or 0.95%, to $40.20 a barrel, adding to a 1.4% rise on Wednesday.

US crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, US Energy Information Administration (EIA) data showed, as refiners ramped up production and imports eased.

“Oil prices have remained range bound as OPEC has done its job on the supply side and the key uncertainty now remains about demand recovery,” Harry Tchilinguirian, Head of Commodity Research at BNP Paribas, said.

“Crude exceeded expectations of a draw but gasoline stocks rose, which means the recovery has at least paused for a week.”

New Covid-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters’ tally, in the biggest one-day spike since the start of the pandemic.

California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures.

Gasoline stockpiles were higher, confounding expectations of a fall. Analysts highlighted worries about the spike in cases in heavily populated US sun-belt states, which are among the country’s biggest consumers of gasoline.

Attention will be on US driving activity over the upcoming July 4 holiday weekend and how quickly US producers revive shut-in production, analysts said.