Oil prices rally, despite rising US crude inventories

November 25, 2010 | 09:02

(0) user say

Oil prices jumped on Wednesday, despite news of a surprise gain in US crude reserves, as traders reacted to a raft of positive economic data in the key energy-consuming nation.

New York's main contract, light sweet crude for January, soared $2.61 to close at $83.86 per barrel.

Brent North Sea crude for delivery in January leaped $2.59 to $85.84 a barrel in London.

The US Department of Energy announced Wednesday that US crude oil inventories rose by one million barrels in the week ending November 19.

That confounded market expectations for a heavy drop of 1.9 million in the key energy consuming nation.

However, crude futures were propelled higher as positive news on unemployment, consumer spending and wages bolstered belief that the US economic recovery was far from dead.

Claims for unemployment benefits fell more than expected last week, compounding a choppy, but steady downward trend seen in recent weeks.

The Labor Department said new claims had fallen to 407,000 in the week to 20 November, down 34,000 from the week before.

New claims have been stuck above 450,000 for most of the year, so the breakout was seen as evidence that sky-high unemployment may soon edge downward.

The oil market remains under pressure, meanwhile, amid stubborn fears over the impact of the eurozone crisis and simmering tensions on the Korean peninsula.

World financial markets have been rocked this week by eurozone debt worries and North Korea firing dozens of artillery shells onto a South Korean island on Tuesday, killing four people and triggering an exchange of fire.

"The oil market is under pressure, with crude oil prices consolidating around the $82-per-barrel area," said Sucden analyst Myrto Sokou.

"For the rest of the week, volumes might be light with choppy trading conditions due to the US Thanksgiving holiday (on Thursday)."

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional