* Brent premium over U.S. WTI jumps to seven-month high
* Fire at Dutch industrial complex hits shipping traffic
* EIA data shows 4.16 million barrel drop in crude stocks
* Technicals show U.S. crude price support above $88/bbl
* Coming up: API U.S. inventory data, 4:30 p.m. EST Tuesday
(Updates prices, market activity)
By Gene Ramos
NEW YORK, Jan 5 (Reuters) - Oil prices bounced back to
above $90 a barrel on Wednesday as unexpectedly big gains in
U.S. private sector jobs spurred optimism the economy was
recovering at a faster pace.
Wall Street and commodities markets latched on to the ADP
Employer Services employment report, which showed the biggest
rise in its data which goes back to 2000. Oil shook off early
losses and turned positive after failing to drop below $88 a
barrel. []
Oil fell earlier in the day after suffering the biggest
single-day drop since mid-November on Tuesday. Crude was
initially led lower by a stronger dollar, which typically
weighs on commodities as they become more expensive for buyers
using other currencies.
Markets are now awaiting the release of December U.S.
nonfarm payrolls data due out on Friday for further signs the
U.S. economy is recovering more quickly than expected.
[]
Traders shrugged off U.S. oil inventory data that showed
the fifth straight week of crude stockpile declines,
attributing the draw to year-end moves by oil companies to ease
tax burdens rather than to rising demand.
Oil's rally back was led by London Brent crude <LCOc1>,
which was bolstered by a chemical plant fire at the Dutch
Moerdijk industrial zone which affected shipping traffic in the
Europe's busy Rotterdam-Antwerp ports. The fire did not impact
Royal Dutch Shell's oil refinery there. []
ICE Brent February crude settled up $1.97 at $95.50 a
barrel. NYMEX February crude ended up 92 cents at $90.30.
Brent's premium to the U.S. benchmark West Texas Intermediate
surged above $5 a barrel, the highest in seven months.
SUPPORTIVE ECONOMIC DATA
U.S. private sector employment surged in December, adding
297,000 jobs, nearly three times more than some forecasts, the
closely watched ADP report showed, the most bullish signal in
months that the recovery in the world's biggest economy is
stepping up a notch. []
The Institute of Supply Management also reported that its
gauge of the massive U.S. services sector reached its highest
level in more than four years.
"As equities rallied, the oil bulls that were on the
sidelines came back and prices are bouncing back solidly," said
Gene McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
In late trade, the U.S. dollar regained its strength and
was up 1.03 percent against a basket of currencies. <.DXY>
U.S. oil prices have returned to above $90 after a
profit-taking binge that slashed values to just above $89 on
Tuesday. Crude ended 2010 at $91.38, 15 percent higher than a
year ago.
At current levels, oil has risen to a "danger zone" that
could harm the global economic recovery, according to a
Financial Times interview with Fatih Birol, chief economist of
the International Energy Agency, the West's energy watchdog
based in Paris.
"The oil import bills are becoming a threat to the economic
recovery. This is a wake-up call to the oil consuming countries
and to the oil producers," Birol told the FT.
While many believe crude prices could top $100 a barrel
this year, analysts say Saudi Arabia and other members of the
Organization of the Petroleum Exporting Countries would move to
increase oil production to calm markets if crude prices rose to
a level that could threaten the global economic recovery.
(Additional reporting by Robert Gibbons and Josh Schneyer in
New York; Emma Farge in London; Editing by Matthew Robinson and
Jim Marshall)
