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Oil nears $80 on U.S. jobless data, Ecuador unrest
3:00pm EDT
By Joshua Schneyer
NEW YORK (Reuters) – Oil rose to a seven-week high above $79 a barrel on Thursday after lower-than-expected U.S. jobless claims and revised second-quarter economic growth data stoked optimism for higher fuel demand in the world’s top oil consumer.
As September draws to a close, U.S. oil futures were on track for their biggest monthly gain since May of 2009, and a rally of around 4 percent in the third quarter.
“Crude prices are really latching on to any indication of improving oil demand going forward,” said Matt Smith, analyst with Summit Energy in Louisville, Kentucky.
Oil was up $1.16 at $79.02 by 12:20 p.m. EDT after touching a session high of $79.47 a barrel, the highest since August 11. ICE Brent crude futures rose 81 cents to $81.58 a barrel.
New U.S. jobless benefit claims fell more than expected last week, signaling a potential job market recovery, while second-quarter U.S. growth was revised up to 1.7 percent, from an earlier estimate of 1.6 percent.
The U.S. dollar strengthened and U.S. stock markets dropped, tempering oil’s gains.
“There’s positive momentum in oil markets, but some recovering strength in the dollar and a drop in equities has taken away from earlier gains,” Smith said.
The Institute for Supply Management-Chicago on Thursday said its U.S. Midwest business activity index rose in September to the highest since July, beating expectations.
The U.S. dollar firmed against a basket of foreign currencies .DXY. A stronger dollar can limit gains in oil, making the commodity, priced in dollars, more expensive for holders of foreign currency.
Weekly data on Wednesday showed larger-than-expected drawdowns in crude and refined product inventories in the United States.
Oil stocks at Cushing, Oklahoma, the delivery point for NYMEX crude futures, fell in the week to September 28 to their lowest weekly level since late April, according to energy industry data provider Genscape.
Thursday’s oil price rise outpaced other commodities, which mostly fell. The Reuters-Jefferies CRB index .CRB fell after hitting an 8-month high on Wednesday, but was poised to end the third quarter up about 10 percent.
There were no known disturbances to oil shipments from OPEC member Ecuador, where chaotic police strikes set off a wave of political unrest.
Ecuador’s military declared that troops in the South American country remain under the control of President Rafael Correa. Troops closed some Ecuadroean airports and, according to a government minister, Correa was considering dissolving Congress, which could allow him to temporarily rule by decree in the Andean country of 14 million.
NYMEX heating oil futures rose 1.7 percent and the contract was set to be the strongest performer in the oil futures complex for September, outpacing gains in crude oil and gasoline, on strong export demand for distillates, according to Reuters data.
ICE gas oil, Europe’s benchmark for diesel and heating oil, was trading 3.2 percent higher by 11:57 a.m. EDT.
Brokers said some support came from a French rolling port strike at the country’s strategic Fos-Lavera oil hub near Marseille, which entered its fourth day and threatened operations at French and Swiss refineries.
The strike blocked a total of 24 oil tankers, the port authority said.
(Additional reporting by Robert Gibbons and Gene Ramos in New York, Zaida Espana and Ikuko Kurahone in London, Florence Tan in Singapore. )


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