SF: Oil Falls Second Day as Service Industries Grow at Slower Pace
Sept. 6 (Bloomberg) -- Oil declined for a second day after service industries grew in August at the weakest pace in seven months, signaling that the U.S. economic rebound may slow.
Futures dropped after the Institute for Supply Management's index of non-manufacturing business, which covers about 90 percent of the economy, fell to 51.5 in August from 54.3 the prior month. The expansion, reported Sept. 3, was the smallest since January. The Labor Department said the same day that companies in the U.S. added more jobs in August than forecast.
"The thing that dampened the optimistic sentiment from the employment report was the non-manufacturing ISM for August," said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. "People are still cautious, there is still a lot of uncertainty."
The October contract lost as much as 51 cents, or 0.7 percent, to $74.09 a barrel in electronic trading on the New York Mercantile Exchange, and was at $74.12 at 10:39 a.m. Sydney time. It slipped 0.6 percent to $74.60 on Sept. 3. Prices are down 6.5 percent this year.
There will be no floor trading on the Nymex today because of the U.S. Labor Day holiday, and all electronic trades will be counted as part of the Sept. 7 session.
The U.S. trade deficit probably narrowed in July as a slowing economy prompted Americans to buy fewer goods from abroad, according to the median of 60 estimates in a Bloomberg News survey ahead of the Commerce Department's Sept. 9 report.
Jobs Report
The U.S. Labor Department said Sept. 3 that private payrolls advanced by 67,000, after a revised 107,000 increase in July. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent.
"Until you really see the unemployment rate decline, it's difficult to see consumer spending picking up significantly," National Australia Bank's Westmore said.
Brent crude oil for October settlement dropped as much as 49 cents, or 0.6 percent, to $76.18 on the London-based ICE Futures Europe exchange. The contract fell 0.3 percent to $76.67 on Sept. 3.
