Oil prices rise on strong economic indicators

Oil prices jumped Thursday on greater economic optimism following strong economic indicators in the US, China and Europe. A barrel of US benchmark West Texas Intermediate futures for delivery in March settled at US$95.95 a barrel on the New York Mercantile Exchange, up 72 cents. In London, Brent North Sea crude for March delivery ended at US$113.28 a barrel, up 48 cents from Wednesday. "The economic news from China looked pretty good and this is adding to ... reports suggesting that the global recession is nearing an end, and that is making people more bullish about oil demand," said Michael Lynch of Strategic Energy and Economic Research. Oil prices have steadily risen since mid-December, gaining more than 12 per cent since Dec. 10. Figures from British bank HSBC showed China's manufacturing activity in January hitting a two-year high. "China has been a main driver of oil demand growth for the last decade and (if there is) strong growth, that is a very bullish indicator for the market," said Lynch. Also Thursday, US jobless claims came in well below expectations, an unexpectedly strong result for the second week in a row. In Europe, a purchasing managers index, an indicator of manufacturing and services activity, in January reached its highest level in 10 months. "It is too soon to call this the turn in the European economy, but some are bound to see it that way," said analyst Chris Low of FTN Financial. The greater optimism came as weekly data from the US Department of Energy pointed to a larger build of oil stockpiles than expected. The results showed a gain of 2.8 million barrels, whereas analysts had predicted an increase of 1.7 million barrels.