Oil falls $1 after US revises employment data lower

By Georgina McCartney

HOUSTON, - Oil prices fell on Wednesday after the U.S. government revised significantly lower the number of jobs added in the year to March, pressuring investor sentiment.

Brent crude futures were down $1.04, or 1.35%, at $76.16 a barrel by 1:00 p.m. EDT, while U.S. West Texas Intermediate crude futures were down $1.15 or 1.15% at $72.02.

U.S. employers added far fewer jobs than originally reported in the year through March, the Labor Department said on Wednesday.

"The market is now going from pricing in a stronger economy to a potential hard landing, which is why oil prices are reluctant to move higher," said Phil Flynn, analyst with Price Futures Group.

The department's estimate for total payroll employment for the period from April 2023 to March 2024 was lowered by 818,000.

"The sting in the scorpion’s tail that hurts worse than anything is that this data helped create a crisis of confidence," said Tim Snyder, chief economist at Matador Economics.

The revised job data offset support from a drop in U.S. oil inventories.

U.S. crude stocks, gasoline and distillate inventories fell in the week ending Aug. 16, the Energy Information Administration said on Wednesday.

Crude inventories fell by 4.6 million barrels to 426 million barrels in the week, the EIA said, compared with analysts' expectations in a Reuters poll for a 2.7 million-barrel draw.

Meanwhile, investors' worries persisted over the prospect of economic weakness in China weighing on the country's crude demand.

China's economic struggles have contributed to weak processing margins and low fuel demand that has curbed operations at state-run and independent refineries.

"We are measuring everything right now by the Chinese economy and if anything is leaning negative out of China, it is going to pressure energy," said Matador Economics' Snyder.

GEOPOLITICAL RISK

Elsewhere, a Greek-flagged oil tanker was adrift in the Red Sea on Wednesday after repeated attacks that started a fire on the vessel and caused the ship to lose power, the UK maritime agency said.

Later in the day another vessel reported two explosions in the water nearby some 57 nautical miles south of Aden, the United Kingdom Maritime Trade Operations and Ambrey said.

Iran-aligned Houthi militants have launched a series of attacks on international shipping near Yemen since last November in solidarity with Palestinians in the war between Israel and Hamas.

The Red Sea leading to the Suez Canal is a key shipping route for oil, and sustained attacks pose a potential threat to global crude flows.

Meanwhile, U.S. Secretary of State Antony Blinken wrapped up a Middle East trip on which he had intended to broker a ceasefire agreement in Gaza.

Blinken and mediators from Egypt and Qatar have raised hopes of a U.S. "bridging proposal" that could shrink the gaps between the two sides in the 10-month war.

"Hopes of a ceasefire between Israel and Hamas have weighed on oil, along with lingering demand concerns," ING commodities strategists said.

However, Israeli airstrikes across Gaza have killed at least 50 Palestinians in the past 24 hours, Palestinian health authorities said on Wednesday, as the military said troops continued to target militants and seize weapons and ammunition.

This article was generated from an automated news agency feed without modifications to text.