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Oil slips ahead of crucial US job data

Oil slips ahead of crucial US job data
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First Published: Fri, Jun 03 2011. 04 30 PM IST
Updated: Fri, Jun 03 2011. 04 30 PM IST
London: Oil slipped on Friday ahead of a key US jobs report, which could feed debate over whether the world’s top economy is headed for a protracted slowdown.
The United States is the second-biggest energy consumer after China. Any further economic slowdown could hit consumer spending, leading to lower fuel use.
By 3:56pm, Brent crude futures fell $1.22 to $114.32 a barrel. US crude fell $1.01 to $99.39. Volume was moderate for both contracts.
“There have to be question marks on what sort of demand we are going to see in crude. Non-farm payrolls are going to be vital tonight as they will have a short-term, big impact on oil,” said Ben Le Brun, a Sydney-based markets analyst at CMC Markets.
The US Labour Department will release its closely watched employment report at 6:00pm. The report provides one of the best early reads on the health of the US economy and it regularly sets the tone for global financial markets.
US employment probably lost steam in May as high energy prices and the effects of Japan’s earthquake bogged down the economy.
Non-farm payrolls likely increased 150,000 last month, according to a Reuters survey of economists, after advancing by an 11-month-high of 244,000 jobs in April.
The job creation slowdown would confirm the economic weakness already flagged by other data from consumer spending to manufacturing.
It could stoke fears about the depth and duration of a slowdown that started early in the year.
The dollar slipped to a one-month low against the euro. European shares slipped early on Friday
Global investor sentiment was also hit by Moody’s threat of a US ratings downgrade on Thursday and along with reports Greece had agreed to new deficit-cutting measures took the wind out of the dollar’s strong run, with the euro hitting a one-month high against the US currency.
Oil was also pressured by a jump in U.S. crude inventories. On Thursday, some Opec members, including the most influential Saudi Arabia, said the group is considering raising output ahead of the group’s meeting next week.
The fall in oil prices was limited by civil unrest in the Middle East, with fighting in Yemen intensifying.
Yemeni troops wounded at least seven people on Friday when they fired on protesters demanding an end to President Ali Abdullah Saleh’s three-decade rule in a conflict that has brought the state to the brink of civil war.
Yemen is a small oil producer, but it neighbours bigger producers, such as top exporter Saudi Arabia.
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First Published: Fri, Jun 03 2011. 04 30 PM IST
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