Oil Prices Gain on Draghi Pledge
Oil futures rose for a third straight day on Thursday after a pledge by the European Central Bank to protect the euro zone eased some worries about the region's debt crisis.
A drop in U.S. jobless-benefit claims for last week also supported crude's advance and with the ECB comments overshadowed worries about slowing global growth and the euro zone's troubles.
ECB President Mario Draghi, at a conference in London, pledged to do whatever it takes to preserve the euro zone. He also said tackling high sovereign borrowing costs comes within the central bank's mandate.
The euro rallied to a two-week high against the dollar on Draghi's comments, encouraging investors to buy dollar-denominated commodities such as oil and copper.
"The comments by Draghi are likely to bring that confidence back," said Eugen Weinberg, head of commodities research at Commerzbank.
In London, September Brent crude settled at $105.26 a barrel, gaining 88 cents, after hitting a session high of $106.18.
U.S. September crude closed at $89.39, rising 42 cents, after having gained earlier to a session high of $90.47.
ECB DETAILS SOUGHT, U.S. GDP AWAITED
Some analysts said a lack of details on potential ECB action helped cool the early enthusiasm from Draghi's comments.
"The lack of details is taking away some of the excitement after markets rallied, thinking it was signaling a policy change," said Phil Flynn, analyst at Price Futures Group in Chicago.
News of increased production by Exxon Mobil Corp and Hess Corp, two oil companies operating in the prolific Bakken prospect, also curbed the day's gains, said Hamzah Kahn, analyst at the Schork Group in Villanova, Pennsylvania.
Exxon said it boosted Bakken production in the second quarter by 60 percent year-on-year and has doubled its output since its entry into the play.
Hess said its Bakken output rose to 55,000 barrels of oil equivalent (BOE) per day in the same period, up from 25,000 BOE per day last.
Trading volumes were light, with Brent dealings down 20 percent from the 30-day average and U.S. crude down 36 percent from its 30-day average, according to Reuters data. Analysts cited caution ahead of Friday's U.S. government report on second-quarter economic growth.
U.S. gross domestic product likely grew at a 1.5 percent annual rate in the second quarter, according to a Reuters poll. That would be the slowest since the second quarter of 2011, which analysts said could push the U.S. Federal Reserve to ease monetary policy.
Brent's premium against U.S. crude rose 46 cents to $15.87, from $15.41 on Wednesday.
Brent and U.S. crude hit their year's low in late June, and since then have been on an uptrend, with the geopolitical risk premium rising due to tensions between Iran and the West over Tehran's nuclear program and anxieties about turmoil in Syria.
But oil futures remain about 20 percent below their 2012 highs hit in early March, pressured by slowing global growth that has affected demand for oil.
MIXED U.S. DATA
New U.S. claims for jobless benefits fell last week by 35,000 to a seasonally adjusted 353,000, near a four-year low, the U.S. Labor Department said. It was a much bigger drop than economists had expected.
Another set of data showed overall orders for long-lasting U.S. manufactured goods rose more than expected in June.
However, excluding transportation, durable goods orders dropped 1.1 percent, the biggest decline since January.
A third report showed U.S. pending home sales fell in June as fewer properties came on the market, according to an industry group, pointing to weak home resales in July.
The report helped limit early gains for U.S. crude, traders said.