OIL FUTURES: Nymex Crude Drops Below $98/Bbl After Jobs Data
May 04 2012 - 12:32PM
Dow Jones News
U.S. crude-oil futures plunged below $98 a barrel for the first
time since February, giving up more than $4 after a
weaker-than-expected U.S. jobs report.
Light, sweet crude oil for June delivery recently traded $4.36,
or 4.2%, lower at $98.18 a barrel on the New York Mercantile
Exchange. Brent crude oil on ICE Futures Europe fell $3.88, or
3.3%, to $112.22 a barrel.
The benchmark U.S. contract tipped below $100 a barrel in the
aftermath of the jobs report, then continued its slide through the
morning.
The Labor Department said U.S. nonfarm payrolls rose by 115,000
in April, less than the gain of 168,000 expected by economists
surveyed by Dow Jones Newswires. The unemployment rate fell a tenth
of percentage point to 8.1%.
Employment data in the U.S., the world's biggest oil consumer,
is a closely watched indicator of fuel and oil demand. Weak
employment data usually correlate with lackluster demand as fewer
motorists travel to work or take vacations.
The jobs report, though disappointing, "wasn't catastrophic,"
said Andy Lebow, senior vice president of energy futures at
Jefferies Bache. But it came on the heels of downbeat economic data
from both the U.S. and Europe and further erodes confidence in the
broader economy.
"The global economy has given indication for weeks that it's
slowing down," he said.
Earlier this week, Spain disclosed that it is officially in a
recession, while a survey of economic activity in the euro zone in
April found a faster contraction than previously thought.
Meanwhile, Saudi Arabia, the world's largest oil exporter, has
increased production to 10 million barrels a day in recent months.
And oil inventories in the U.S. continue to swell, rising 10% over
the last 10 weeks amid weak demand for crude oil.
Nymex crude-oil futures have fallen more than 10% since hitting
a recent settlement high of $109.77 a barrel in late February.
Brent crude oil, the European benchmark, has seen an even steeper
fall, dropping more than 11% from its recent high earlier this
year.
The U.S. jobs data also follow two months of
weaker-than-expected employment growth. Traders who thought that
the earlier figures were an exception are now worrying that they
may be the rule, said Jason Schenker, energy analyst at Prestige
Economics.
"If anyone had an inkling of bearish sentiment, today's the day
to pull out fast," he said.
Front-month June reformulated gasoline blendstock, or RBOB,
recently fell 9.11 cents, or 3%, to $2.9589 a gallon. June heating
oil fell 9.89 cents, or 3.2%, to $2.9880 a gallon.
-By Dan Strumpf, Dow Jones Newswires; 212-416-2818;
dan.strumpf@dowjones.com.