WSJ: Crude Weaker As Dollar Swings After Jobs Data
NEW YORK (Dow Jones)--Crude oil futures prices were lower early Friday, tracking gyrations in the dollar after the release of stronger-than-expected U.S. jobs data.
Crude futures had traded as much as $1.37 a barrel lower overnight as the dollar strengthened, but recovered as the dollar tumbled turned weaker on the employment data. The Labor Department said U.S. non-farm payroll in September dropped by 95,000, far above the consensus of a 10,000 decline. The unemployment rate remained at the August level of 9.6%. A slowing job-loss rate is a tentative sign of economic recovery that would creates potential for an uptick in oil demand.
As the euro gained against the dollar in reaction to the data, crude trimmed losses and hovered above $81 a barrel. But a quick reversal in the foreign exchange market, with the dollar rebounding against the euro, sent oil down.
"It's all dollar-related," said Tom Bentz, a broker and analyst at BNP Paribas in New York. "This market is extremely overbought" and due for a selloff after climbing to five-month highs this week, led in large measure by the dollar weakness. Because oil is priced in dollars, weakness in the U.S. currency makes oil a cheaper buy for investors using foreign currencies.
Light, sweet crude oil for November delivery on the New York Mercantile Exchange was down 36 cents at $81.31 a barrel at around 8:45 a.m. EDT.
Jim Ritterbusch, president of Ritterbusch and Associates, a Galena, Ill.-based consultancy, said crude prices must hold above $80 a barrel for the uptrend in the market to continue. Crude prices fell by 1.9%, or $1.56 on Thursday, to $81.67 a barrel, snapping a two-day uptrend. The drop was the biggest since Aug. 31.
Bentz said he could see crude prices returning to the mid-$70 level with "not too much trouble" if the rally continues to falter as U.S. inventories remain at the highest levels since the early 1980s.
November-delivery reformulated gasoline blendstock futures were down 0.96 cent at $2.1084 a gallon, while November heating oil futures were down 1.76 cents at $2.2339 a gallon.
-By David Bird, Dow Jones Newswires, 1-212-416-2141; david.bird@dowjones.com
