Published : 3 years ago, on 10/06/2021

By Julia Payne

LONDON (Reuters) -Oil prices rose on Thursday after U.S. government data showed new unemployment claims fell to the lowest level since the country’s first wave of COVID-19 last year while inflation was higher than expected.

Brent crude oil futures were up 55 cents, or 0.76%, at $72.77 a barrel by 1356 GMT, holding near highs not seen since May 2019.

U.S. West Texas Intermediate oil futures rose 51 cents, or 0.73%, to $70.47 a barrel, staying their highest since Oct. 2018.

The number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months, while consumer prices increased further in May as the pandemic’s easing grip on the economy continues to boost domestic demand.

“The recent unemployment and labor data published in the US are a definite positive sign that the recovery in the country is speeding up,” Louise Dickson, analyst at Rystad Energy, said.

“More business activity means more energy consumption, and a better economy is a needed prerequisite for road and air traffic to increase.”

In another report on Thursday, the Labor Department said its consumer price index increased 0.6% last month after surging 0.8% in April, which was the largest gain since June 2009.

“Our view is that the Fed will not taper this year and rising consumer and producer prices could make oil an attractive investment vehicle against short-term inflationary pressure,” said Tamas Varga, analyst at PVM Oil Associates.

Oil had slipped in earlier trade as a rise in U.S. fuel stocks cast doubt on demand ahead of the summer driving season.

U.S. crude oil stockpiles that include the Strategic Petroleum Reserve (SPR) fell for the 11th straight week as refiners ramped up output, but fuel inventories grew sharply due to weak consumer demand, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]

Crude inventories that exclude the SPR fell by 5.2 million barrels in the week to June 4 to 474 million barrels, the third consecutive weekly drop. But fuel stocks were up sharply, with product supplied falling to 17.7 million barrels per day (bpd) versus 19.1 million the week before.

Implied gasoline demand fell to 8.48 million bpd in the week to June 4, down from 9.15 million bpd from the week before, but up from 7.9 million bpd a year ago, EIA data showed.

Weighing on prices, India’s fuel demand slumped in May to its lowest since August last year, with a second COVID-19 wave stalling mobility and muting economic activity in the world’s third largest oil consumer.

(Reporting by Jessica Jaganathan; Editing by Jason Neely, Kirsten Donovan)