Oil surges after jobs reports

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Oil prices rose to a new 17-month high Thursday after jobs reports painted a picture of improving, although still high, unemployment in the U.S.

What prices are doing: Crude oil prices for May delivery rose $1.11, settling at $84.87 a barrel on Thursday. Prices reached a high of $85.22 during mid-day trading.

oilprices.mkw.gif
Click the chart for the latest commodity prices.

Oil prices are at their highest since Oct. 9, 2008 when crude settled at $86.59.

What's moving the market: Strong demand from China, India and the Middle East has driven oil prices up recently, analysts say. Reports on Thursday showed stronger-than-expected manufacturing growth in China in March, boosting investors' confidence that demand from the Asian country will continue, if not increase.

Meanwhile, three jobs reports released Wednesday and Thursday also lead investors to believe the Federal Reserve will continue to keep interest rates near zero for an extended time period. That news typically drives the dollar down and oil prices up. Since crude oil is priced in the U.S. currency, a weaker dollar makes oil a more attractive investment for foreigners.

Job cuts surged 61% in March, a report by Challenger, Gray & Christmas Inc. said Thursday. A separate report on Wednesday showed that private-sector employers continued to cut jobs in March, although at their lowest levels since February 2008.

A third report, released Thursday, showed unemployment insurance claims fell last week to their lowest level since August 2008.

In a speech Wednesday morning, President Obama announced he will open new areas for offshore drilling. Prices rose on Wednesday, nearing the $84 mark, on initial euphoria reacting to the plan, which over time, would lessen U.S. dependency on foreign oil.

What analysts are saying: Oil prices are trading higher Thursday, primarily on the news from the jobs reports, not necessarily because of supply and demand concerns, said Phil Flynn, a senior market analyst with PFG Research said.

"The biggest thing that could bring prices down now, is a good jobs number," he said.

Bullish investors are also looking for strong demand from China as a sign to move prices higher. "Explosive" manufacturing growth numbers out of China on Thursday -- as well as statements from China's government signaling that the country is not going to boost the value of its currency to rein in inflation -- are renewing investors' confidence in continued demand from the country, Flynn said.

Looking ahead: Tomorrow's latest government jobs report will take center stage even though the U.S. markets close for Good Friday.

If jobs post a better-than-expected number, oil could drop by as much as $5, if not more, immediately, Flynn said.

But the disappointing jobs reports on both Wednesday and Thursday are raising fears that instead, tomorrow's report could be ugly. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.01%4.03%
15 yr fixed3.12%2.97%
5/1 ARM3.11%2.99%
30 yr refi4.04%4.09%
15 yr refi3.15%3.05%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 5:36pm ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.