Oil prices soar on strong US jobs data, Egypt turmoil

New York City: Oil prices shot higher last week, buoyed by optimism for a strengthening US economy after a better-than-expected job growth report and worries about unrest in Egypt.

New York’s main contract, West Texas Intermediate (WTI) light sweet crude for August, surged $1.98 to $103.22 a barrel, its highest close since May 2, 2012.

In London trade, Brent North Sea crude for delivery in August soared $2.18 to settle at $107.72 a barrel.

That was the European benchmark’s highest close since April 2, bringing Brent prices up 5 percent over the week.

WTI gained 6.5 per cent over the week, and in intra-day trade on Friday hit a high of $103.31.

“Oil traders remain concerned that unrest in Egypt may disrupt oil shipments via the Suez Canal and SUMED pipeline... but shipments are reportedly normal so far,” said Timothy Evans of Citi Futures.

The New York benchmark opened slightly higher then accelerated gains as investors cheered the US job report.

“The reaction has been very optimistic and positive to the job report,” said David Bouckhout of TD Securities.

The Labour Department reported the US added 195,000 jobs in June and job growth in the prior two months was more robust than first estimated.

While the US unemployment rate remained at 7.6 per cent in June as expected, job creation was well above expectations, raising speculation the Federal Reserve would begin to wind down its large stimulus programme.

Bouckhout said prices showed the market had already baked in a Fed move to taper its $85 billion a month bond-buying in the near future.

He noted that in recent months, investors had reacted negatively to positive economic news on concerns the Fed would take away economic stimulus.

Now, he said, “We see a change and more of the ‘bad news is bad’ and ‘good news is good.’”