MW: Oil prices trade below $92 after China, jobs data
By Laura Mandaro and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures added to weekly losses Thursday, retreating after a report that showed first-time jobless claims didn’t fall last week as much as had been expected. Weak China manufacturing data and general worries about global demand exerted the biggest pull.
As the U.S. floor session opened, crude for October delivery CLV2 -0.34% traded down 53 cents at $91.45 a barrel on the New York Mercantile Exchange. They had dropped sharply at the Europe open, then pared some of those losses.
The October contract expires Thursday. Thursday’s decline came on top of a 3.5% tumble Wednesday, finishing at a six-week low. At current prices, front-month crude-oil futures have fallen nearly 8% just this week.
The Labor Department said applications for jobless benefits fell by 3,000 to a seasonally adjusted 382,000 in the week ended Sept. 15. Economists polled by MarketWatch had expected a drop to 375,000. Read more on jobless claims.
It was the first significant report that will come out during the U.S. session, which also includes a midmorning reading from the Philadelphia Federal Reserve’s September manufacturing survey.
Weighing on oil before the U.S. open, preliminary data from HSBC on Chinese manufacturing conditions in September showed a drop in activity for the 11th straight month.
The HSBC “flash” purchasing managers’ Index for the world’s second-largest economy printed at 47.8, below the 50-point threshold that separates expansion and contraction, but this was up slightly from a final reading of 47.6 in August. Read full story on China PMI.
“The extended losses are hinting more and more that the bullish impact of QE3 had already been priced into the market for several weeks and that the focus is now on weaker global economic growth indicators,” said analysts at JBC Energy GmbH in emailed comments.
Oil futures and equities, two asset classes closely linked to global growth expectations, have been rallying since early August, in part due to anticipation that a sluggish global recovery would spur major developed economies’ central banks to add more money to the financial system. The Federal Reserve announced its third round of so-called quantitative easing, or QE3, earlier this month.
Inventories, Saudi offer of supply
The sharp declines in crudel prices Wednesday came as official data released by the Energy Information Administration showed U.S. inventories jumped 8.5 million barrels in the week ended Sept. 14, trouncing expectations for a 2.5 million-barrel increase.
Tim Evans,energy analyst at Citi Futures, said Wednesday’s steep fall in oil, which defied a rise on Wall Street, came as “money managers cut long positions in tacit recognition that the oil market has its own fundamentals, including ample current supplies.”
Also, a Financial Times report saying Saudi Arabia, the world’s largest petroleum exporter, has offered customers in the U.S., Europe and Asia extra oil supplies to offset rising prices weighed on the commodity. Read Market Extra on what’s behind oil’s steep fall this week.
Among other contracts early Thursday, gasoline for October delivery RBV2 +1.74% rose 4 cents to $2.87 a gallon. Heating oil for delivery in the same month HOV2 +0.83% added 2 cents to $3.07 a gallon.
Natural gas for October delivery NGV12 +1.59% also gained, up 4 cents at $2.80 per million British thermal units, ahead of weekly U.S. gas-in-storage data.
Laura Mandaro is a MarketWatch editor, based in San Francisco.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Phani Kumar in Hong Kong contributed to this report.
