Oil prices higher after US data

LONDON (AFP) — Oil prices gained ground on Thursday as the market digested the latest stockpiles data in leading consumer the United States which traders said was supportive overall.
The price of London's Brent North Sea crude for August delivery rose 41 cents to 68.74 dollars per barrel.
New York's main futures contract, light sweet crude for August, gained 33 cents to 69.00 dollars.
"It's all about gasoline (petrol) at the moment," said VTB Capital analyst Andrey Kryuchenkov.
The US Department of Energy said Wednesday that inventories of gasoline jumped 3.9 million barrels in the week ending June 19, compared to expectations for a gain of one million barrels.
Crude stockpiles, however, dropped by 3.8 million barrels, steeper than the 1.3 million barrels expected by most analysts.
"A mixed enough report but somewhat supportive for crude," Kryuchenkov noted, adding: "We are still pleased to see stable gasoline demand."
Oil also got support on the back of a weaker US currency, which makes dollar-priced crude cheaper for buyers using stronger currencies and therefore tends to stimulate demand and push prices higher.
Conflicting signals about the strength of a recovery for the global economy have led to volatile swings in oil prices recently, with some analysts saying they have risen too fast while underlying demand is weak.
Crude oil plunged from record peaks of more than 147 dollars in July 2008 to about 32 dollars in December as the economic downturn hit but the market has since won back some ground on recovery hopes.


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TOPWRAP 4-OECD report, U.S. data back recovery hopes

* OECD revises up projections for economic outlook

* U.S. May durable goods orders stronger than expected

* ECB lends record 442 billion euros in 1st 12-month loan

* U.S. Federal Reserve rate decision later

By Ritsuko Ando and Anna Willard

NEW YORK/PARIS, June 24 (Reuters) - Prospects for economic recovery next year have improved for the first time in two years, the OECD said on Wednesday, while U.S. data showed an unexpected jump in orders for long-lasting manufactured goods, backing hopes the global economy may be healing.

The U.S. data, along with expectations for the Federal Reserve to remain cautious about interest rate hikes, weighed on the U.S. dollar even as it rose against the Swiss franc on reports of intervention.

The Organisation for Economic Cooperation and Development said that the slowdown is close to bottom and that the economies of its 30-member countries should return to modest growth of 0.7 percent next year, a big reversal from a 4.1 percent fall this year.

Its previous forecast was for a contraction of 0.1 percent.

"This is the first time since 2007 that we have revised up the projection," OECD Chief Economist Jorgen Elmeskov told Reuters after the release of the OECD's economic outlook.

"The bad news is that the projection still implies that we are only nearing the bottom now, and the recovery that follows is going to be a very slow one, probably a fragile one."

EYES ON FED

The Federal Reserve Open Market Committee is widely expected to keep interest rates at a record low range of zero to 0.25 percent and maintain planned debt purchases. It is due to deliver its decision about 2:15 p.m. (1815 GMT).

Many analysts say the Fed is also likely to stress that the economy remains fragile and lean against rate hike speculation, while acknowledging signs of activity picking up here and there.

Manufacturing, which accounts for about one-third of the economy, provides a good barometer for overall business health, and the May durable goods orders report showed solid and unexpected gains.

New orders for long-lasting U.S. manufactured goods rose by a much stronger-than-expected 1.8 percent in May, surprising analysts who had expected a fall of 0.6 percent.

"The economy is bottoming here, and we're looking for the Fed to maybe change its statement slightly and maybe start to suggest a more neutral balance of risk. A nod, basically, to an exit strategy," said Kim Rupert at Action Economics LLC in San Francisco.

A separate report showed that U.S. mortgage applications climbed last week from a seven-month low, adding to emerging signs that the three-year housing market collapse may be abating.

But another report showed sales of new U.S. single-family homes slipped in May, underscoring that conditions in the hard-hit housing market were still fragile.

"The numbers point to a stabilization, but certainly not a robust recovery," said Keith Hembre, chief economist at First American Funds in Minneapolis.

ECB POURS MONEY

Central banks around the world have been trying to restore order in money markets and reduce the cost of borrowing for banks, firms and consumers.

The European Central Bank lent banks a massive 442 billion euros ($613 billion) on Wednesday, its biggest fund injection ever, raising expectations for a pick-up in business activity in the euro zone.

Barclays Capital economist Julian Callow said the ECB's loan, its first money market operation with a term as long as one year, should help to keep down 12-month Euribor rates.

"This is all about giving banks confidence in the term structure of their liabilities to ensure they can keep giving loans," he said.

The euro and shorter-dated euro zone government bond yields briefly fell to session lows after the ECB announcement. ID:nLO360695 The pan-European FTSEurofirst rose after the ECB tender results, and was up 2.4 percent at 1508 GMT.

 

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