BLBG: Oil Falls as Report Shows U.S. Companies Added Fewer Jobs Than Estimated
Crude oil dropped after a private report showed that U.S. companies added fewer jobs than forecast last month, bolstering concern that the economy and fuel demand growth will slow.
Oil fell as much as 1.1 percent after ADP Employer Services showed employment rose by 38,000 in May, the smallest increase since September. A 175,000 gain was forecast, according to a Bloomberg News survey. Oil rose to a three-week high yesterday when Luxembourg Prime Minister Jean-Claude Juncker signaled more aid for Greece will be announced in June.
“The ADP report came out and added to concerns about demand,” said Phil Flynn, vice president of research at PFGBest in Chicago. “We were on a bailout high earlier. The news that European leaders were working on a new rescue plan for Greece had given the market a boost.”
Crude oil for July delivery declined 99 cents, or 1 percent, to $101.71 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Futures are up 40 percent from a year ago. Prices climbed 2.1 percent to $102.70 yesterday, the highest settlement since May 10.
Brent crude oil for July delivery dropped $1.04, or 0.9 percent, to $115.69 a barrel on the London-based ICE Futures Europe exchange.
Businesses added 206,000 jobs in May after a 268,000 gain in April, economists surveyed by Bloomberg News estimate a Labor Department report to show in two days.
“The recent economic numbers are looking pretty weak,” said Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage LLC in New York. “We are all waiting on Friday’s jobless numbers to give us a better idea about how the economy is doing.”
‘Elevated’ Jobless Rate
Federal Reserve officials have said the jobless rate “remains elevated” at 9 percent, one reason central bankers pledged at their last meeting to complete an asset-purchase plan by the end of this month and to keep borrowing costs near zero.
“Prices won’t drop much because the disappointing economic data opens the door to additional Fed measures to kick start the economy,” Larry said.
China’s manufacturing expanded at the slowest pace in nine months in May as the government extended a campaign to cool inflation and the property market, a survey of companies showed.
The country’s Purchasing Managers’ Index was at 52 from 52.9 in April, the China Federation of Logistics and Purchasing said in an e-mailed statement today. The number was higher than the median forecast of 51.6 in a Bloomberg News survey of 16 economists. The index has a seasonal pattern of falling in May, economists said before the release.
The U.S. and China are the world’s biggest oil-consuming countries, responsible for 32 percent of global demand in 2009, according to BP Plc, which publishes its Statistical Review of World Energy each June.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
