By Myra P. Saefong and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell Thursday, pressured by lingering worries about European debt troubles and a slowdown in the hiring trend for private payrolls as traders awaited government data on petroleum supplies.
Natural gas futures traded modestly lower ahead of a government inventory update also due shortly.
The July contract for light, sweet crude-oil CLN2 -1.14% gave up 63 cents, or 0.7%, to $87.19 a barrel on the New York Mercantile Exchange. Prices sank $2.94 on Wednesday to their lowest since October, amid raging worries about Spain and the outlook for the euro-zone.
The contract was on course to end May with losses in excess of 17%.
Over in Europe, the European Commission called Wednesday for a creation of a banking union, which was Thursday backed by European Central Bank President Mario Draghi. Read more on Draghi.
And in the U.S., the pace of hiring in private jobs has slowed. So far in the second quarter, the average monthly gain for private-sector payrolls is 123,000, compared with a pace of more than 200,000 seen for the U.S. economy in the first quarter, according to to Automatic Data Processing Inc. Read more on ADP.
The data furthered “the bearish case for the markets,” said Michael Fitzpatrick, editor in chief of the Kilduff Report, referring to the ADP figures as disappointing and feeding “an increasing negative narrative for Friday’s monthly employment report.
An index that measures business condition in the Chicago region fell in May to its lowest since September 2009 and separate data showed that the U.S. economy grew at a 1.9% pace in the first quarter, slower than the 2.2% rate initially reported. Read more on GDP.
Downbeat U.S. economic data and euro-zone woes have weighed on the prospects for global oil demand.
Supply data watch
Meanwhile, traders awaited data from the U.S. Energy Information Administration on weekly inventories due at 11 a.m. Eastern.
Late Wednesday, the American Petroleum Institute reported that crude-oil supplies fell by 353,000 barrels for the week ended May 25. Distillate stocks also fell by 1.3 million barrels, but gasoline inventories climbed by 2.1 million barrels, the trade group said.
Analysts polled by Platts expect that supplies of crude oil climbed by 100,000 barrels last week. They also forecast unchanged inventories of gasoline and a rise of 150,000 barrels in distillate stocks.
Although data released by the API Wednesday showed inventories declined, the closely watched EIA data was expected to “change that impression,” according to Tim Evans, energy analyst at Citi Futures Perspective.
“Overall OPEC oil production has been rising despite declining output from Iran, combining with seasonal global demand weakness, to create a supply/demand surplus,” said Evans, referring to the Organization of the Petroleum Exporting Countries.
“Statements from Saudi [Arabia] and other OPEC oil officials arguing that $100 per barrel represents a ‘fair value’ for Brent crude-oil have been backed by a level of production that steers the market toward that level,” he said.
The July futures for Brent UK:LCON2 -0.90% , Europe’s benchmark oil contract, traded at $102.97 a barrel on ICE Futures London, down 50 cents, at last check.
Elsewhere in the energy complex, the June gasoline RBM2 -1.07% contract was down 1.3% at $2.82 per gallon, while the heating-oil HOM2 -0.73% contract for the same month was down 1.1% at $2.71 per gallon.
July natural-gas futures NGN12 -0.17% was little changed at $2.41 per million British thermal units.
The EIA will release its weekly data on natural-gas supplies in storage at 10:30 a.m. Eastern, as usual.
Analysts polled by Platts expect the data to show that natural gas supplies rose between 67 billion cubic feet and 71 bcf for the week ended May 25.
The energy complex’s performance Thursday came despite a mild drop for U.S. dollar, which would tend to support dollar-denominated oil prices. The ICE dollar index DXY -0.11% , a measure of the greenback’s performance against a basket of six other major currencies, stood at 82.949, weakening a bit from 83.053 in North American trade Wednesday. Read more on currencies.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
