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UPDATE 5-Oil rises on global economic data
February 2, 2012 / 1:20 PM / 6 years ago

UPDATE 5-Oil rises on global economic data

* U.S. crude touches lowest in six weeks

* Brent premium to U.S. oil highest since November

* U.S. crude stocks jump more than expected -EIA (Updates prices, adds U.S. jobs data)

By Simon Falush and Peg Mackey

LONDON, Feb 2 (Reuters) - Brent crude oil gained on Thursday on strong global economic data, which outweighed a large build-up of oil stocks in the United States that pushed U.S. oil to its lowest level in six weeks.

ICE Brent crude for March was up 22 cents to $111.78 a barrel by 1444 GMT after earlier rising as high as $112.50. U.S. crude was at $96.47, down $1.14 after reaching its lowest since Dec. 20.

U.S. crude inventories jumped more than 4 million barrels last week, exceeding an expected build of 2.4 million barrels. Gasoline demand fell to an 11-year low.

“Everything is looking so bearish for WTI (U.S. benchmark West Texas Intermediate crude) relative to Brent, there’s lots of oil heading into Cushing from Canada and the surrounding area,” Seth Kleinman, an analyst at Citigroup, said.

Brent’s premium to U.S. crude CL-LCO1=R reached its highest since Nov. 14.

“There’s spike potential for Brent. Inventories (in Europe)are too low, (and) European crude is moving to Asia, which is looking for alternatives to Iranian crude,” Kleinman said.

U.S. government jobs data helped bolster investor optimism on the outlook for the economy, lifting demand-sensitive assets. New claims for unemployment benefits dropped by 12,000 to a seasonally adjusted 367,000, versus a forecast of 375,000.

On Friday, the government will release the January non-farm payroll report, and economists forecast 150,000 jobs were added in January, less than the previous month, which benefited from holiday hiring.

Also supporting oil, factory activity rose last month in the United States, China and Germany, the world’s three manufacturing superpowers, raising hopes the global economy will not be dragged down by the euro zone debt crisis.

“We’ve got a bullish bias, and the Chinese PMI data was supportive of that,” said Jonathan Barratt, chief executive of Barratt’s Bulletin.

IRAN SUPPLY WORRIES

Political risks also provided significant support.

U.S. lawmakers are considering a bid to force Washington to blacklist Iranian President Mahmoud Ahmadinejad and the country’s supreme leader, Ayatollah Ali Khamenei, in an effort to thwart Tehran’s nuclear capabilities.

Such a measure would designate them as human rights abusers, freeze any assets they have in the United States and deny them visas to enter the country.

The fresh penalties would build on a European Union oil embargo and sanctions by the United States that seek to shut out Iran’s main clearinghouse for oil revenues, the Iranian central bank.

“It is a stalemate that will continue to squeeze Iran,” Barratt said. “It’s against everyone’s interest to have a conflict as they don’t want to see crude at $140 to $150.”

The U.S. sanctions have put top crude buyers in Asia in a quandary. South Korea and Japan, heavily dependent on imports, will seek clarification from Washington on how much oil they can buy from Iran under the new law. (Additional reporting by Florence Tan in Singapore, editing by Jane Baird)

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