Oil gains on Fed optimism, housing data
By Gene Ramos
NEW YORK (Reuters) - Crude oil futures rose on Thursday, adding to the previous session's gains, on optimism about the energy demand outlook after the U.S. Federal Reserve vowed to move quickly should the economy weaken and data showed a solid pickup in U.S. home sales in March.
Trading was volatile, with oil's early gains slashed after a weak report on jobless claims, then rebounding to session highs on the upbeat housing data.
As was the case on Wednesday, the oil markets received support from stronger equities and, to some extent, a weakened dollar, which improved investors' risk appetite. .N <USD/>
Comments by Fed Chairman Ben Bernanke on Wednesday "are good for oil: people think that if growth derails in the U.S. the Fed is ready to step in with further Quantitative Easing (QE), which gives very strong support to commodities", Danske Bank's chief FX and commodities analyst Arne Lohmann Rasmussen said.
The central bank's commitment to keep U.S. interest rates low and act if the economy weakens lifted global equities and the euro. The central bank's policy meeting concluded on Wednesday.
A U.S. industry report on Thursday showed sales of previously owned U.S. homes rose more than 4 percent to a near two-year high last month, offering a brighter outlook for the slow-recovering housing market.
"This is a positive note as an improvement in economic data, adds support to risk assets," said Sean McGillivray, vice president and broker at Great Pacific Wealth Management in Grants Pass, Oregon.
But U.S. initial claims for jobless benefits fell only slightly last week, reflecting a struggling jobs market that could crimp energy demand in the world's No. 1 oil consumer. Continued...