September 30, 2010 / 2:47 AM / in 7 years

Oil nears $80 on U.S. jobless data, Ecuador unrest

NEW YORK (Reuters) - Oil rose to a seven-week high near $80 a barrel on Thursday after lower U.S. jobless claims stoked optimism for economic recovery in the world’s top oil consumer and as military and police protests thrust OPEC-member Ecuador into political unrest.

U.S. oil futures settled up $2.11 at $79.97. Oil posted an 11.2 percent gain in September, the largest monthly jump since May 2009. Oil rose 5.7 percent during the third quarter, which ends Thursday.

Oil trading volumes were moderate. European benchmark Brent crude futures rose $1.59 to $82.36 a barrel in late trade.

“Crude prices are really latching on to any indication of improving oil demand going forward,” said Matt Smith, analyst with Summit Energy in Louisville, Kentucky.

New U.S. jobless benefit claims fell more than expected last week, signaling a potential job market recovery, while second-quarter U.S. growth was revised up to 1.7 percent from an earlier estimate of 1.6 percent.

In Ecuador, an OPEC member country which typically exports around 300,000 barrels per day of crude, police and military personnel went on strike to protest cuts in public sector benefits and pay and thrust the country into political chaos.

Military troops, some with banners demanding government benefits, closed off Ecuadorean airports. President Rafael Correa, who accused rivals of seeking to stage a coup, said he had been injured by protesters in a skirmish.

Correa is considering dissolving Ecuador’s Congress and ruling by decree, one of his government ministers said. Top military brass declared their loyalty to Correa, and state oil company PetroEcuador said the country’s oil installations were not affected by the unrest.

“(Ecuador is) certainly a situation that bears watching,” said Tom Bentz of BNP Paribas in New York.

“If there was a complete shutdown of operations for a period of time it could have an effect. But markets are certainly not in short supply right now, so the effect could be muted.”

The Institute for Supply Management-Chicago on Thursday said its U.S. Midwest business activity index rose in September to the highest since July, beating expectations.

The U.S. dollar strengthened, U.S. stock markets dropped, and several other commodities weakened on Thursday, factors that may have limited further gains in the oil market.

The U.S. dollar firmed against a basket of foreign currencies .DXY. A stronger dollar can limit gains in oil, making the commodity which is priced in dollars more expensive for holders of foreign currency.

Weekly data on Wednesday showed larger-than-expected drawdowns in crude and refined product inventories in the United States.

Oil stocks at Cushing, Oklahoma, the delivery point for NYMEX crude futures, fell in the week to September 28 to their lowest weekly level since late April, according to energy industry data provider Genscape.

Thursday’s oil price rise outpaced other commodities, which mostly fell. The Reuters-Jefferies CRB index .CRB fell after hitting an eight-month high on Wednesday, but was poised to end the third quarter up about 10 percent.


NYMEX heating oil futures rose 2.4 percent and were set to be the strongest performers in the oil futures complex for September. They outpaced gains in crude oil and gasoline on strong export demand for distillates, according to Reuters data.

ICE gas oil, Europe’s benchmark for diesel and heating oil, was trading 3.9 percent higher.

Brokers said some support came from a French rolling port strike at the country’s strategic Fos-Lavera oil hub near Marseille, which entered its fourth day and threatened operations at French and Swiss refineries.

The strike blocked a total of 24 oil tankers, the port authority said.

Additional reporting by Robert Gibbons and Gene Ramos in New York, Zaida Espana and Ikuko Kurahone in London, Florence Tan in Singapore; editing by Jim Marshall

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