BLBG:Oil Falls to 3-Week Low Before U.S. Jobs Data, Europe Elections
Oil fell to its lowest level in more than three weeks and headed for a weekly decline before the monthly U.S. jobs report and after services and manufacturing output in the euro region shrank more than initially estimated.
Futures lost as much as 1.1 percent in New York. A gauge of purchasing managers in both industries in Europe dropped to 46.7, below the earlier estimate of 47.4, London-based Markit Economics said today. Hiring in the U.S. probably picked up in April after the smallest gain in five months, economists said before a report today. European equities declined before elections in France, Greece, Italy and Germany this weekend.
“We experienced another sell-off in the oil market this morning, with West Texas Intermediate crude oil retreating toward $100 per barrel, as investors remain cautious ahead of the release of the non-farm payroll data,” Myrto Sokou, an analyst at Sucden Financial Ltd. in London, said by e-mail today. “Crucial elections in France and Greece bring further uncertainty and nervous trading to today’s session, amid persistent concerns about eurozone’s economic stability.”
Crude for June delivery on the New York Mercantile Exchange fell as much as $1.09 to $101.45 a barrel, the lowest since April 11, and was at $101.60 at 9:49 a.m. London time. Prices are down 3.2 percent this week and poised for the first weekly decline in three.
Brent oil for June settlement on the London-based ICE Futures Europe exchange fell 43 cents to $115.65 a barrel. The European benchmark contract’s premium to New York futures widened to $14.05 from $13.54 yesterday.
Economic Data
Hiring probably picked up in the U.S. in April after the weakest gain in five months and the jobless rate stayed at 8.2 percent, economists said before Labor Department data today. Payrolls climbed by 160,000 workers after a 120,000 gain in March, the median forecast in a Bloomberg News survey showed.
“The markets will be holding a collective breath,” Stephen Schork, president of The Schork Group Inc., a consultant in Villanova, Pennsylvania, said in a note today. “Recent headlines suggest the number might underwhelm.”
The Institute for Supply Management said yesterday its U.S. non-manufacturing index fell to a four-month low of 53.5 in April from 56 in March. The median projection of 70 economists surveyed by Bloomberg News was for 55.3. A reading above 50 in the Tempe, Arizona-based group’s gauge signals expansion. The Bloomberg Consumer Comfort Index declined to 37.6 last week, the lowest level in two months.
Physical Oversupply
“Market sentiment is deteriorating,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by phone today. Oil fell because of “physical oversupply in the market and comments from OPEC that they are not happy with current prices.” He cited U.S. stockpile data, which showed inventories increased to the most in 21 years.
There is no oil-supply shortage and the Organization of Petroleum Exporting Countries is “not happy” with current prices, which may lead to demand destruction, the group’s Secretary-General Abdalla el-Badri said in Paris yesterday. OPEC’s 12 members pump about 40 percent of the world’s crude.
Four elections in Europe this weekend have the potential to reshape the region’s political map and show how the response to the financial crisis remains hostage to the whims of voters on both sides of the region’s economic divide. The Stoxx 600 Index (SXXP) slipped 0.8 percent to 255.39 as of 9:52 a.m. in London.
Oil may extend losses next week as economic growth and fuel consumption slows, according to a Bloomberg News survey. Prices will decline through May 11, according to 18 of 33 analysts and traders surveyed by Bloomberg News. Eleven respondents, or 33 percent, predicted futures will rise and four estimated there will be little change. Last week, 43 percent of survey respondents forecast a decrease.
New York crude has technical support along its 100-day moving average, data compiled by Bloomberg shows. Futures halted yesterday’s drop near this indicator, at $102.40 a barrel today. Buy orders tend to be clustered near chart-support levels.
To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
