Oil prices inched higher in choppy trading on Thursday, boosted by favourable economic data that showed the U.S. economy grew faster than expected in the third quarter, even as U.S. budget talks seemed stuck in deadlock.
Continue Reading Below
Front-month Brent and U.S. crude futures were on track to post their second consecutive weekly gain as trading volume thinned ahead of next week's Christmas holiday.
Brent crude rose to $110.41 a barrel by 1815 GMT, after settling $1.52 higher in the previous session, the biggest one-day gain since Nov. 19. The front-month contract tested the 200-day moving average of $110.31 in afternoon trading, touching a high for the day of $110.54.
U.S. oil rose 40 cents to $90.38 a barrel, after hitting its highest intraday level since Oct. 22 at $90.54.
Data from the U.S. Commerce Department showed the nation's Gross Domestic product grew at a 3.1 percent annual rate in the third quarter, compared with expectations for a 2.7 percent rise.
U.S. as well as European oil futures edged higher in afternoon trading even as the market closely watched the stalled U.S. budget talks, which continue to weigh on the price of oil and other riskier assets.
Continue Reading Below
Republicans in the U.S House of Representatives pushed ahead with their own plan on Thursday, in response to the automatic spending cuts and higher taxes that could hit the economy next year, should Congress and the Obama administration fail to agree on a way to deal with the nation's budget deficit in time to avoid the "fiscal cliff".
House Majority Leader Eric Cantor predicted there will be enough votes to pass the Republican "Plan B" proposal that will raise taxes only on incomes over $1 million and which the White House called a "multi-day exercise in futility".
"We are not expecting anything substantial on the budget talks today so the long weekend may have started sooner. It looks like everyone took the day off. " said Mark Anderle with Tac Energy in Dallas.
On Thursday, the deadlock muted trading in U.S. stocks even after IntercontinentalExchange reached a deal to buy the operator of the New York Stock Exchange for $8.2 billion.
Also dampening the good bit of economic news was the increase in U.S. initial claims for unemployment benefits last week, which was slightly larger than economists' projections.
U.S. STOCKS DRAWDOWN SUPPORTS
U.S. RBOB gasoline and heating oil futures rose slightly as they found support from refinery issues in the U.S. Gulf Coast and stock drawdown reported in the government's inventory data on Wednesday.
The gains were slight with U.S. RBOB gasoline up 0.51 percent to $2.75 a gallon and heating oil up 0.75 percent to $3.05 a gallon.
Still, traders kept a close eye on the delayed restart of a crude unit at Motiva Enterprises Port Arthur, Texas, refinery and maintenance on a gasoline making crude unit at BP Plc's Texas City refinery.
Data from the U.S. Energy Information Administration (EIA) had shown a 964,000-barrel drop in U.S. crude stocks to 371.65 million barrels, compared with an average forecast for a 1.1 million barrel drawdown in a Reuters poll of analysts. Crude imports fell 101,000 barrels per day (bpd) to 8.36 million bpd.
Distillates, which include diesel and heating oil, fell 1.09 million barrels to 116.97 million, versus expectations for a 1 million barrel build, according to EIA data.