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Oil steady near 3-week low as economic recovery slows

Oil steady near 3-week low as economic recovery slows
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First Published: Fri, Jul 02 2010. 11 43 AM IST
Updated: Fri, Jul 02 2010. 11 43 AM IST
Singapore: Oil was steady below $73 on Friday, near 3-week lows after a spate of weak manufacturing data renewed worries about slower global economic growth ahead of a key US jobs report.
Manufacturing growth cooled around the world in June, reports from China, Europe and the US showed on Thursday, adding to evidence that the global economic recovery is losing steam.
Investors will seek further direction from Friday’s US unemployment report for June, with non-farm payrolls expected to have declined by 110,000 as many of the temporary workers hired in May to complete the US census were laid off.
US crude for August slid 18 cents to $72.77 a barrel by 0540 GMT, after touching $72.05 on Thursday, the lowest intraday price since 9 June.
“The market still needs to see strong signs of recovery to move higher,” said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan. “If the jobs number is bad, prices will extend losses toward $70.”
Front-month WTI has declined every day this week and is poised for the biggest weekly drop in percentage terms since early May, when the European debt crisis roiled markets, at more than 7 percent.
Brent crude edged higher on Friday, with the August contract up 4 cents at $72.38.
Japan’s Nikkei average edged up 0.4% on Friday after five straight days of falls as charts showed the benchmark deeply oversold, while the euro held near five-week highs against the dollar.
Hurricane Alex dissipated over central Mexico, having spared most oil facilities in the Gulf of Mexico.
Producers on Thursday were already restarting some of the 421,350 barrels per day (bpd) of oil output, about a quarter of the US Gulf of Mexico total, that were shut as a precaution.
On Monday prices rose above $79 to the highest level since 6 May as Alex regained strength in the gulf, forcing the shutdown of two Mexican loading terminals.
“This market tried to touch the upper end of the $70-$80 trading range but it failed. Now it is time to go to the lower limit,” said Hasegawa.
New claims for US jobless benefits unexpectedly rose last week, while an ISM report and data showing pending sales of previously owned US homes plunged a record 30% in May to an all-time low also disappointed markets on Thursday.
But a better-than-expected monthly jobs report for June could spark a bout of short-covering and provide a bounce for equities and oil ahead of the long U.S. Independence Day weekend.
Energy data provider Genscape said on Thursday that Cushing, Oklahoma crude stocks fell 285,000 in the week to Tuesday, reducing a glut that has depressed front-month US crude prices relative to contracts for later delivery.
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First Published: Fri, Jul 02 2010. 11 43 AM IST
More Topics: BC | Oil | Price | US | Jobs |