POSTED: 03:30 a.m. HST, Aug 23, 2013
LAST UPDATED: 07:41 a.m. HST, Aug 23, 2013
The price of oil made small gains above $105 a barrel on Friday, ahead of house sales figures that could show further improvement in the U.S. economy.
By early afternoon in Europe, benchmark oil for October delivery was up 14 cents to $105.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.18 to close at $105.03 on Thursday.
Experts say there are signs — including falling unemployment claims and rising manufacturing — that demand for oil in the world's largest economy is gaining momentum. At the same time, the U.S. Federal Reserve is expected to begin phasing out its monetary stimulus measures, which have led to lower interest rates in an effort to boost economic growth. The measures have also motivated investment in oil and other commodities.
"Over the last couple of days, more and more signals have emerged that point to an improving economic situation in the U.S.," said a report from JBC Energy in Vienna. "Although a reduction of the bond purchasing program would lower the interest in risky assets, we see it as a positive development reflecting the fundamental improvement of the U.S. economic situation, which eventually would also be felt in oil demand."
Traders will turn their attention later Friday to the release by the U.S. government of new home sales for July. The data are key to evaluating the strength of the housing market, a critical element of the overall economy.
Risk premiums linked to the political crisis in Egypt and labor conflicts at key Libyan ports used to ship oil exports have also supported crude prices over the past days.
Egypt controls the Suez Canal and the Sumed pipeline, crucial transport routes between the Middle East and the Mediterranean Sea through which around 4.5 million barrels of oil and refined products are shipped daily.
Brent crude, which sets prices for imported oil used by many U.S. refineries, was up 41 cents to $110.31 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Heating oil added 0.92 cent to $3.0829 per gallon.
— Natural gas fell 2.1 cents to $3.524 per 1,000 cubic feet.
— Wholesale gasoline gained 1.77 cents to $2.8561 per gallon.
Pamela Sampson in Bangkok contributed to this report.