Oil steady as upbeat economic data, ECB stimulus support

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By Christopher Johnson and Ron Bousso

LONDON (Reuters) – Oil prices held steady on Friday, finding support from brighter economic data and a global stock market rally after the European Central Bank signaled more stimulus.

The positive tone offset persistent concerns over a glut in global crude oil and refined product supplies that have battered the energy market for over a year.

Benchmark was 8 cents higher at $ 48.16 a barrel by 0700 ET after settling up 23 cents in the previous session. for December was down 10 cents at $ 45.28 a barrel, having risen 18 cents on Thursday.

ECB President Mario Draghi said on Thursday that new euro zone initiatives could be unveiled as soon as December to stoke the economy.

The euro saw its largest one-day percentage drop against the dollar in nine months on Thursday, a move that might have been expected to depress oil, which is traded internationally in the U.S. currency. [FRX/]

But Hans van Cleef, senior energy economist at ABN AMRO Bank, said hopes that European economic stimulus measures would boost oil demand were supporting fuel globally.

“Draghi’s comments are supportive,” van Cleef said. “Nevertheless, with the dollar finding support, the upside for oil prices will be limited.”

Jonathan Barratt, chief investment officer at Ayers Alliance, said markets had decided governments would not allow economies to falter.

“These expectations suggest more active economic development will force consumption to go up,” Barratt added.

Data from the United States on Thursday showed a strong rebound in home resales in September and new applications for unemployment benefit hovering around 42-year lows.

European stock markets joined a global share surge that buoyed overall sentiment. [MKTS/GLOB]

Adding further support to an outlook shaken in recent months by weaker growth in key emerging economies including China, Japanese manufacturing expanded in October at what could be its fastest pace in 19 months, according to Markit/Nikkei Japan Flash Manufacturing PMI data.

China’s commercial crude oil stocks at the end of September rose 2.38 percent from August, while diesel stocks saw a record 15.68 percent drawdown and refined fuel stocks overall dropped 7.46 percent, the official Xinhua News Agency reported on Friday without giving actual volumes.

Rising U.S. oil inventories, which climbed by a larger-than-expected 8 million barrels to 476.6 million last week, were a potential headwind to oil prices, helping to fuel concern over global oversupply. [EIA/S]

Investors also awaited rig data on Friday for guidance on how U.S. oil production has responded to recent price falls.

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Oil steady as upbeat economic data, ECB stimulus support