Crude futures wavered near flat Thursday after a surprise drop in U.S. jobless claims, while traders kept watch on the development of Tropical Storm Don in the Gulf of Mexico.
Light, sweet crude for September delivery recently traded 8 cents, or 0.1%, higher at $97.48 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 35 cents higher at $117.79 a barrel.
The number of new people claiming jobless benefits last week fell to the lowest level in nearly four months, declining by 24,000 to 398,000, the Labor Department said Thursday. A reading below 400,000 is considered by economists to mean the economy is adding more jobs than it is shedding.
Oil prices rebounded from early losses following the report, which offered some unexpected relief to investors worried about the sluggish labor market. But traders say the debt ceiling debate has kept prices restrained from any sharp move higher, unless the storm in the Gulf of Mexico raises fears of production cuts.
"The only thing that is going to move the market today is the hurricane watch," said Carl Larry, director of derivatives and research at Blue Ocean Brokerage. "Until we get some clarification on the budget deal, some clarification on employment from the jobs numbers next week...nobody wants to be in this market."
Tropical Storm Don has already prompted evacuations of non-essential personnel from several oil and gas platforms in the Gulf as it aims toward the south Texas coast. Early Thursday, Exxon Mobil Corp. (XOM) said it had shut in roughly 8,000 barrels a day of production ahead of the storm.
The U.S. National Hurricane Center said in an advisory Don is moving west-northwest across the southern Gulf of Mexico with sustained wins of 40 miles per hour. Some strengthening is possible over the next 48 hours.
"Even if it's a mild storm, they still have to shut down," said Rich Ilczyszyn, a broker with Lind-Waldock in Chicago. "Then if there's damage, then that's something we have to worry about too. The risk is to the upside right now."
Still, price moves have been relatively muted as oil traders await more signals on the debt-ceiling impasse. Stock markets declined Wednesday and investors have begun selling Treasurys maturing in coming weeks, as Congress seeks agreement on a deal to avoid a potential U.S. default. The moves in other markets have helped pull oil back from triple-digit levels hit earlier this week.
Front-month August reformulated gasoline blendstock, or RBOB, recently traded 0.37 cent higher at $3.1460 a gallon. August heating oil recently traded 0.80 cent higher at $3.0906 a gallon.