NEW YORK (MarketWatch) -- Crude-oil futures extended their decline Wednesday as data showed that more than half a million U.S. private-sector jobs were shed last month, fuelling concerns about the continued deterioration of the labor market.
Energy traders also awaited government data expected to indicate U.S. crude and gasoline supplies declined last week.
Crude for July delivery was last down 67 cents, or 1%, to $67.89 a barrel in electronic trading on Globex.
The U.S. private sector cut 532,000 net jobs in May, but this was the fewest jobs lost since November, according to the ADP employment index.
The ADP index for April was revised to a decline of 545,000 from a decline of 491,000 previously reported, however.
The ADP index comes two days before the government releases its own estimate of changes in nonfarm payrolls and the unemployment rate for May. Economists surveyed by MarketWatch are looking for payrolls to drop by 500,000 in the government survey, which would be the smallest decline since October. Read more.
Oil prices fell "on the back of a stronger dollar, and a slightly weaker equity market outlook," said analysts at Action Economics.
"Profit-taking has been a factor as well, as traders lighten up long positions ahead of the release of weekly EIA inventory data," they said.
Data from the Energy Information Administration will be released at 10:30 a.m. Eastern time.
Analysts expect U.S. commercial crude stockpiles to have declined by 2 million barrels for the week ended May 29, according to a Platts survey of analysts.
"Given the massive inventory reductions of more than 12 million barrels seen during the four weeks of May, a smaller-than-expected inventory decline should not have large negative repercussions on the markets," wrote analysts at Commerzbank in a note to clients.
"However, this in combination with a somewhat stronger U.S. dollar, a correction in equities and weakening market sentiment could lead to a significant oil price correction," they said.
Meanwhile, gasoline stockpiles are expected to drop 1.5 million barrels, while middle distillate inventories are projected to rise by 950,000 barrels, the Platts survey showed.
Late Tuesday, the American Petroleum Institute reported that crude supplies fell 828,000 barrels on a week-to-week basis, that motor gasoline stocks rose 99,000 barrels and that distillate supplies added 3.4 million barrels.
The Washington-based API, an industry trade group, uses different criteria for measuring changes in inventories.
Also on Globex, July reformulated gasoline fell 1 cent to $1.92 a gallon and July heating oil dropped 3 cents to $1.77 a gallon.
July natural gas futures dropped 7.50 cents, or 1.8%, to $4.045 per million British thermal units. The government's update on gas in storage is due out Thursday morning.
