Oil rallies on US jobs data, bullish EIA report

Reuters/New YorkOil futures rallied yesterday, erasing losses on strong jobs data and US government forecasts for lower domestic crude production growth and higher global demand for oil. US job openings surged to a 14-year high in February the Labor Department said in its monthly Job Openings and Labor Turnover Survey (JOLTS), lifting oil prices. “That JOLTS report was certainly quite strong and strong employment equals strong gasoline demand,” said John Kilduff, partner at Again Capital in New York. Oil got more support from news that Minneapolis Fed President Narayana Kocherlakota made a case for waiting until the second half of 2016 to raise interest rates, and to then raise them gradually to just 2% by the end of 2017. Crude futures got additional lift when an Energy Information Administration (EIA) monthly report raised forecasts for US and global demand growth and lowered forecasts for crude oil production growth in the US. US May crude was up $1.65 at $53.79 a barrel at 12:58 p.m. EDT (1658 GMT), having traded from $51.17 to $53.84. Brent May crude was up $1.10 at $59.22, having swung from $57.02 to $59.27. Also cited as supportive was news that an oil spill into the Mississippi River on Monday forced authorities to close part of the waterway in Louisiana. Eight refineries along the river in the region account for about 12% of US refining capacity, according to the EIA. Crude futures fell earlier on signs of growing oversupply as Iranian officials visited China to seek more oil sales following the framework nuclear deal that could lead to lifting sanctions on Tehran. Prices also were pressured by a Goldman Sachs report saying prices needed to remain low for months to slow US oil output growth. The American Petroleum Institute’s (API) weekly report on US oil inventories is due Tuesday at 4:30 p.m. EDT (2030 GMT), with the EIA’s report following on Wednesday at 10:30 a.m. EDT.Iran deal may cut EIA oil price forecast by as Much as $15

Bloomberg/New YorkA final nuclear deal with Iran and the lifting of oil export sanctions from the Opec member could lead the Energy Information Administration to lower its oil price forecast for next year by as much as $15 a barrel.Iran and world powers reached a preliminary agreement on April 2 that set the parameters for further negotiations needed to complete a signed, comprehensive agreement by a June 30 deadline. The re-entry of more Iranian barrels could cut the EIA’s price projection by $5 to $15 a barrel, the US Energy Department’s statistical arm said in its monthly Short-Term Energy Outlook report yesterday.“If a comprehensive agreement that results in the lifting of Iranian oil-related sanctions is reached, then this could significantly change the STEO forecast for oil supply, demand, and prices,” the EIA said in the report. “However, the timing and order that sanctions could be suspended is uncertain.” Iran’s full return to the oil market risks delaying a recovery in prices, which have slumped 50% since last year following a supply glut. Iran could boost output by at least 700,000 barrels a day by the end of 2016, the EIA said. The nation produced 2.85mn barrels a day in March, according to Bloomberg data.The EIA said in the report that West Texas Intermediate crude, the US benchmark, will average $70 next year and Brent will be at $75.03. The forecasts don’t take additional Iranian supply into consideration.The additional output from Iran could lead to an annual average growth of about 500,000 barrels a day in global inventories in 2016.