LONDON: Oil prices crept higher on Thursday, with all eyes on US weekly jobless numbers due later for clues about the potential size and pace of the US Federal Reserve’s stimulus package expected next week.
By 0930 GMT, US crude for December gained 17 cents to $82.11 a barrel, after falling nearly 1 percent on Wednesday, while ICE Brent was 22 cents firmer at $83.45.
Investors awaited the latest weekly reading of US unemployment figures due at 1230 GMT for clues about the health of the world’s largest oil consumer, and ahead of the anticipated second monetary stimulus package (QE2). Most economists expect the Federal Reserve to buy between $80 billion and $100 billion worth of assets a month under a new program to shore up the economy of the world’s largest oil consumer, a Reuters poll found on Wednesday.
Analysts expect oil prices to remain under pressure ahead of the Federal Open Market Committee meeting, on fears that the market may have already priced in the fresh round of monetary stimulus.
"The price will remain above $80 until the Fed meeting and then it depends on the outcome, but I think there’s a good chance that we will fall back below the $80 level next week when Fed measures disappoint market expectations," Commerzbank’s oil analyst Carsten Fritsch said.
Oil prices on Thursday temporarily disconnected from the dollar, which fell 0.4 percent against a basket of currencies. The link between the greenback and crude earlier this week was the strongest in 14 months.
"Just as the weaker dollar off the back of QE2 ‘pricing in’ has supported oil prices, a potentially stronger dollar off the back of QE2 ‘pricing out’ will likely undermine oil prices in the weeks ahead," Daniel Hwang, senior strategist market strategist at Gain Capital Forex.com wrote in a note.
Estimates of the length and amount of the Fed’s easing program varied widely, ranging from $250 billion to as high as $2 trillion in the Reuters survey of economists.
Participants deemed the impact of the asset buying could be limited given that markets have already priced in the effect of another big round of monetary stimulus.
"It’s unlikely that QE alone is going to provide the necessary stimulus for a recovery in commodities. I think there needs to be a very firm underlying picture of economic health in the US before we see any prolonged or sustained rally," Paul Harris, a natural resource analyst at Bank of Ireland, said.
The US unemployment figures due at 1230 GMT will total 453,000 compared to 452,000 in the previous week, according to economists polled by Reuters.
The US will also release GDP data on Friday, with third quarter growth expected to show a modest rise to 2 percent from 1.7 percent in the prior quarter, lifted by an acceleration in consumer spending, a Reuters poll showed.
US oil demand jumped last week but gasoline inventories fell by 4.4 million barrels, the Energy Information Administration (EIA) reported on Wednesday, dampening the bearish effect of greater-than-expected gains in crude stockpiles of more than 5 million barrels.
Strike action at six French oil refineries ended, but oil shortages are likely to continue to bite as workers voted to continue protests at France’s two largest oil ports of Fos-Lavera and Le Havre. –Additional reporting by Alejandro Barbajosa in Singapore
