Crude firmed today ahead this week’s key inventories reports on positive economic data that came out in the US, Europe, Japan and Australia to boost the demand outlook for oil.
A key US manufacturing update from the ISM (Institute of Supply Management) showed a seventh consecutive month of expansion, though at a slower pace than in January as the ISM’s index declined from 58.4 to 56.5 for February. Personal income and spending also increased with income growing 0.1% in January, while spending rose 0.5% and saving rates was lower at 3.3% compared to 4.2% for the previous month.
Australia added to the sentiment today after its central bank raised a key interest to 4% to reflect an improvement in the economic outlook. Meanwhile, the unemployment rate in the euro zone remained at 9.9% and Japan’s jobless rate surprisingly declined to 4.9%.
Further direction for crude will be set by inventories data for the week to 26 February from the American Petroleum Institute (NYSEMKT:API), which is set to be released later today, while a more closely watched stockpiles report from US Energy Information Administration (NYSEMKT:EIA) is due out tomorrow.
April Brent Crude rose to US$77.62/barrel, while US light, sweet crude reached US$79.40/barrel on the New York Mercantile Exchange (NYMEX).
Major oil and gas producers posted small gains today. Tullow Oil (LSE: TLW) added less than 1%, as did BP (LSE: BP), while fellow supermajor Shell (LSE: RDSB) gained nearly 1%, as did another FTSE 100 constituent Cairn Energy (LSE: CNE). BG Group (LSE: BG) outperformed its peers, climbing 1.2%.
Petrofac (LSE: PFC) gained 1%, while fellow oil and gas engineering firm Amec (LSE: AMEC) was flat.
Midcaps were mixed. Dana Petroleum (LSE: DNX) was in the lead with a 1.8% climb. Dragon Oil (LSE: DGO) and JKX Oil & Gas (LSE: JKX) followed with gains of nearly 1%. Heritage Oil (LSE: HOIL) rose marginally, while Salamander Energy (LSE: SMDR) and Soco International (LSE: SIA) were flat.
Premier Oil (LSE: PMO) posted an insignificant loss, while Melrose Resources (LSE: MRS) dropped 1.4%.
Small caps showed little movement today with the exception of EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG), which rallied 8%.
Disclosure: The author holds no positions in the company