by Claudia Assis and Virginia Harrison-MarketWatch.com
Crude-oil futures rallied 3.4% Thursday as equities gained following some good news on the job market front and bargain hunters kept the oil market well bid. Crude for September delivery advanced $2.83 to settle at $85.72 a barrel on the New York Mercantile Exchange, oil's best finish in nearly a week.
Prices rose 4.5% in the previous session after settling earlier this week at their lowest in nearly a year.
Value buyers were back on Thursday, said Tom Bentz, a director at BNP Paribas in New York.
“The market bottomed a couple of days ago” at under $80 a barrel, he said. “Markets got extremely oversold and traders like to buy energy at these lower levels.”
Natural-gas futures turned positive after a weekly government supply report showed a smaller-than-expected increase in inventories.
In an encouraging sign for the U.S. economy, the number of people who applied for unemployment benefits dropped by 7,000 last week to a seasonally adjusted 395,000, the Labor Department said Wednesday.
Economists surveyed by MarketWatch had expected new claims to rise to 410,000 in the week ended Aug 6.
“If you start to get a glimmer of hope of recovery, that should increase the demand,” said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
Depressed crude prices were “the first step in the road to real recovery,” he said. “Not a recovery that’s based on stimulus from the U.S., but a recovery that’s based on real asset prices, and real prices that have been able to clear the market profitably.”
U.S. equity markets opened higher Thursday, following losses of more than 4% the previous session on worries that European debt problems were spreading to France. European stock markets traded flat, while Asian markets traded higher also on bargain hunting.
While worries about a frail global economy have dampened demand, strategists at Barclays Capital said energy market fundaments remain well supported.
“Although the sovereign crisis and associated risk-off trade have hit energy markets, we do not see sharply weaker energy fundamentals — whether in commodities, credit or equities,” the strategists wrote in a research report. Read more about Asian appetite for oil.
The dollar index, a measure of the greenback’s performance against six other major global currencies, declined to 74.677 from 74.731 in late North American trade Wednesday.
Natural gas for September delivery added 10 cents, or 2.6%, to $4.11 per million British thermal units.
The Energy Information Administration earlier Thursday said inventories rose 25 billion cubic feet in the week to Aug. 5. Analysts surveyed by Platts had expected an increase between 34 billion cubic feet and 28 billion cubic feet.
Gasoline also posted gains, with the September contract up 4 cents, or 1.6%, to settle at $2.83 a gallon. September heating oil rose 3 cents, or 1.2%, to $2.90 a gallon.
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