BLBG: Oil Trades Near 6-Week Low as U.S. Jobless Claims Prompt Recovery Concerns
Crude oil traded near a six-week low as rising U.S. jobless claims and a contraction in manufacturing added to concern growth in the world’s biggest oil-consuming nation is slowing.
Oil, down 1.4 percent this week, fell yesterday after the Labor Department said weekly claims for unemployment benefits climbed to the highest level since November. The Federal Reserve Bank of Philadelphia’s general economic index dropped to the lowest reading since July 2009. Total U.S. petroleum inventories reached the highest in at least 20 years, Energy Department data showed earlier this week.
“Sentiment and the fundamental news at the moment is still quite bearish, and I think that will weigh on the market and probably see prices lower,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “I think $70 to $68 is on the cards.”
Crude for September delivery was at $74.33 a barrel, down 10 cents, in electronic trading on the New York Mercantile Exchange at 1:30 p.m. Singapore time. The contract expires today. Yesterday it fell 1.3 percent to $74.43, the lowest settlement since July 7. The more actively traded October contract was up 2 cents at $74.79. Futures are set for a second weekly drop.
U.S. initial jobless applications rose by 12,000 to 500,000 last week, Labor Department data showed. Claims exceeded all estimates from economists polled by Bloomberg News, beating the median forecast of 478,000.
The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7 this month, signaling contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Economists forecast the measure would rise to 7, according to the median projection in a Bloomberg News survey.
Equities Decline
Oil, which topped $87 a barrel in early May, has fallen 6.3 percent this year amid concern the slow pace of economic growth would curb the global recovery in fuel demand.
The Standard & Poor’s 500 Index declined 1.7 percent yesterday in New York and the Dow Jones Industrial Average lost 1.4 percent. Asian stocks fell today, dragging down the MSCI Asia Pacific Index for the first time in six days. The dollar extended gains versus the euro, damping speculative demand for commodities.
U.S. total petroleum stockpiles climbed 5.3 million barrels to 1.13 billion in the week ended Aug. 13, the highest level since at least 1990, an Energy Department report showed Aug. 18.
Oil may fall next week on signs the U.S. economic recovery is slowing, bolstering stockpiles, according to a Bloomberg News survey. Seventeen of 44 analysts and traders, or 39 percent, forecast crude will decline through Aug. 27. Fourteen respondents, or 32 percent, predicted futures will increase, and 13 said there would be little change. Last week, 56 percent of survey respondents projected a drop.
Brent crude for October settlement was at $75.39 a barrel on the ICE Futures Europe Exchange in London, up 9 cents, at 1:33 p.m. Singapore time. Yesterday, the contract dropped $1.17, or 1.5 percent, to $75.30.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net
