NEW YORK (Reuters) - Oil prices rose for a second straight day on Thursday, gaining as much as 3 percent as a strong U.S. jobs report trumped early concerns about French banks and fears that Europe’s debt crisis will spread.
Investors welcomed data showing U.S. jobless benefit claims fell to a four-month low last week, which eased some of the concerns about the euro zone crisis, the U.S. credit downgrade and weak economic data that weighed on markets over the past week.
Oil trading volumes were strong for an sixth straight day as traders piled into riskier assets such as commodities and equities, and U.S. stocks rose 4 percent. .N
Grains and metals markets also rebounded, pushing the Reuters Jefferies CRB Index .CRB, a global commodities benchmark, up 1.84 percent to 326.34, its largest one-day gain since May 18. Gold, which has hit a string of record highs as a safe-haven investment, tumbled nearly 3 percent.
The jobless data helped erase losses for oil earlier in the day, as speculation that France’s credit rating would be downgraded, although three ratings agencies reaffirmed its AAA rating.
“Relative calm over the French bank situation is giving equities and overall sentiment a lift, which has pushed crude prices higher on lessened demand contraction fears,” said John Kilduff, partner at hedge fund Again Capital LLC in New York.
In London, ICE Brent crude for September settled $1.34 higher, or 1.26 percent, at $108.02 a barrel, having swung between $104.43 and $108.08. The gain added to a 4 percent leap on Wednesday.
U.S. September crude settled up $2.83, or 3.41 percent, at $85.72 a barrel, bouncing from the day’s low of $81.03. Near the close, the contract rose further to hit a session high of $85.90. On Wednesday, it rose 4.5 percent.
Brent’s trading volume rose to nearly 33 percent above the 30-day average in late afternoon activity, while U.S. crude’s volume reached 36 percent above the 30-day average.
U.S. crude’s Relative Strength Index (RSI) recovered further, to 37.84, above the 30 threshold that signifies oversold conditions, having dipped below that level earlier in the week.
Implied volatility for U.S. crude stood at 49.81 percent on the Chicago Board Options Exchange’s Oil Volatility Index .OVX, down 9.64 percentage points from the settlement on Wednesday, when it hit a two-year high of 70.37.
“It’s risk premium coming out of the market. It was due for a bounce. It is likely to do so heading into the weekend,” said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire.
Despite weak U.S. gasoline demand and downward revisions to consumption forecasts by the U.S. Energy Information Administration and the International Energy Agency this week, JPMorgan said it expects Brent to average $110 a barrel in the third quarter, before rising to $115 in the next quarter.
Additional reporting by Eileen Moustakis in New York, Emma Farge in London and Manash Goswami in Singapore; Editing by David Gregorio and Dale Hudson