Crude prices jumped after weaker than expected June nonfarm payrolls data signaled that the Federal Reserve would be more patient in hiking the interest rates while a growth in gasoline futures raised hopes that crude demand would grow.
Light sweet crude for August delivery most recently added 30 cents or 0.51% to trade at $57.25 a barrel on the New York Mercantile Exchange.
The US most active contract suffered a 4.2% slump after the US Energy Information Administration reported the first growth in stockpiles in more than 8 weeks.
Brent for August delivery, the global benchmark, most recently advanced by 44 cents or 0.68% at $62,49 a barrel on the London based ICE Futures Exchange.
“We are going into the second half of this year with a heavily oversupplied fundamental picture, which makes any bullish price forecast hard to accept,” David Hufton of PVM brokerage, told the Wall Street Journal.
The US Labor department reported that nonfarm payrolls in the US grew by 223,000 in June, much less than the 230,000 consensus estimate of analysts polled by Reuters.
The weaker than expected weighed down the value dollar against a basket of foreign currencies. A weaker dollar is bullish for the demand of commodities denominated in dollars like crude as it makes them less expensive to holders of other currencies.
The rally was however capped by caution over the outcome of Iran’s pending nuclear talks and the unresolved Greece debt crisis.
The oil market was also expecting the latest weekly data on the rig count in the US from oilfield services provider Baker Hughes later in the day.
“It’s natural for the market to be up given yesterday’s thwacking and the weakness in the dollar,” Matt Smith, director of commodities research at Clipperdata, an energy markets database in Houston, told Reuters.
“But we are likely to trade with some nervousness, ahead of the long weekend and while we wait developments on Greece and Iran.”
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