Oil slips ahead of US jobs data, Hurricane Earl

Oil slips ahead of US jobs data, Hurricane Earl
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First Published: Fri, Sep 03 2010. 09 10 AM IST
Updated: Fri, Sep 03 2010. 09 10 AM IST
Singapore: Oil fell on Friday for the first day in three as traders awaited monthly US employment data, while Hurricane Earl approached the country’s east coast, fuelling concerns of disruptions to refineries and demand during the Labor Day long weekend.
Prices were headed for their third weekly drop in four weeks, having risen last week. US crude for October slipped 22 cents to $74.80 a barrel at 8:17am, while ICE Brent declined 32 cents to $76.61.
Prices on Thursday settled above $75 for the first time this week, after positive US data on weekly jobs and pending sales of previously owned homes eased concerns the world economy would relapse into recession. A day earlier, prices rose on strong U.S. and Chinese manufacturing data.
“The economic data this week largely assuaged concerns that manufacturing is leading the world into a double-dip recession,” JP Morgan analysts headed by Lawrence Eagles said.
“The conveyor belt of tropical storm development is in full swing as we enter the peak months for hurricane activity. Hurricane risks aside, the outlook for the oil market in the coming months looks less supportive,” JP Morgan said, as refineries go into autumn maintenance.
US nonfarm payrolls probably fell for a third straight month in August, a Reuters survey showed, ahead of a monthly report due later on Friday.
Atlantic storms in the past few weeks have veered north, staying away from oil and gas production and refining infrastructure in the Gulf of Mexico.
Still, Hurricane Earl could affect 1.1 million barrels per day of US operable refinery capacity on the Atlantic coast, or about 7% of the nation’s total, the U.S. Energy Information Administration said on Thursday.
“Although Hurricane Earl presents a potential threat to petroleum refineries and seaports, current relatively high inventory levels for most petroleum products should lessen concerns about possible supply outages,” the EIA said.
Total US petroleum inventories are at their highest level since weekly records began in 1990. In a market where fuel supplies remain ample, a disruption to refineries might prove to be bearish for oil prices as less crude would be processed.
Earl may also curb demand for motor fuel from holidaymakers who stay away from the roads as the US driving season comes to a close this weekend.
Tropical Depression Gaston has weakened further and is now classified as a remnant low-pressure area in the central Atlantic Ocean, the U.S. National Hurricane Center said in an advisory on Thursday.
An oil and gas platform operated by Mariner Energy burst into flames in the Gulf of Mexico on Thursday, but the crew of 13 escaped and there were no signs of an oil spill, the US Coast Guard said.
Rising Asian stock markets on Friday were providing some support for oil prices. Japan’s Nikkei edged up 0.4%, buoyed by tech and exporter shares after US data showed improvement in housing and the job market.
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First Published: Fri, Sep 03 2010. 09 10 AM IST
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