Positive outcome of today’s Spanish bond auction and better than expected US employment data lifted oil prices this afternoon, helping crude futures in New York recoup some of yesterday’s losses of over US$4 per barrel.
Spain managed to sell €6 billion worth of five, nine and ten year notes, while it initially targeted to raise between €2.5 billion and €3.5 billion. In addition, it saw yields on its five year bonds drop to 4.02 percent.
The results of the auction, particularly the strong demand for Spanish debt, were seen as a sign that confidence in Europe’s ability to avert a financial meltdown is on the rise.
More good news came from the US this afternoon, where the Department of Labor reported an unexpected decline of 19,000 to 366,000 in the number of initial applications for jobless benefits for the week ending December 11, the lowest level since May 2008.
Likewise, today’s industrial data was positive with the Federal Reserve’s Empire State index surging from 0.61 in November top 9.53 this month in the latest sign that the US economic recovery is gaining momentum.
Futures for crude oil also were supported by yesterday’s inventories report from the US government. The figures showed that demand for oil from the world’s largest energy consumer was on the rise last week as crude oil stocks shed 1.9 million barrels.
Oil prices in New York and London fell sharply yesterday after the Organization of Petroleum Exporting Countries (OPEC) decided to lift its output limit from 24.845 million barrels per day (bopd) to 30 bopd, in line with the current production level of 30.37 million bopd.
This was the first increase in the 12-member cartel, which accounts for 40 percent of global oil supply, in three years.
US light, sweet crude for January delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), added 77 cents to reach US$95.72/barrel in morning trade in New York.
February Brent crude rose US$1.02 to US$105.33/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
Roxi Petroleum (LON:RXP), up 16 percent at 4.2 pence at midday
Xcite Energy (LON:XEL), up 11 percent at 97.89 pence
3Legs Resources (LON:3LEG), up 9.5 percent at 69.61 pence
BowLeven (LON:BLVN), up 4.5 percent at 66.75 pence
Afren (LON:AFR), up 4.5 percent at 80.25pence
The top fallers were:
PetroLatina (LON:PELE), down 6.5 percent at 14.02 pence at midday
Exillon Energy (LON:EXI), down 4.5 percent at 239.3 pence
San Leon Energy (LON:SLE), down 4.5 percent at 8.08 pence
Sound Oil (LON:SOU), down 4.5 percent at 1.7 pence
Serica Energy (LON:SQZ), down 4 percent at 17.51 pence