Oil fell before a report that will indicate the strength of the U.S. economy and as OPEC prepares to meet in Vienna next week to decide output quotas.
Futures have fluctuated from $98 to $104 a barrel this week. The U.S. Labor Department will say today that employers added fewer jobs in May, according to a Bloomberg News survey. The Organization of Petroleum Exporting Countries will respond at its June 8 conference if the world needs more crude, Saudi Arabian Oil Minister Ali Al-Naimi said yesterday. An explosion at a Chevron Corp. (CVX) refinery in Wales killed four workers.
“We expect the non-farm payrolls to be weak, and this will have a negative effect on market sentiment and thereby the appetite for riskier assets such as oil,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Higher fuel prices in the U.S. seem to have started to bite on demand, and so we don’t expect a big upswing in demand this summer.”
Crude for July delivery traded at $99.33 a barrel, down $1.07, in electronic trading on the New York Mercantile Exchange at 11:45 a.m. in London. It earlier rose as much as 47 cents. Prices are little changed this week and have gained 34 percent in the past year.
Brent crude for July delivery was $1.32 lower at $114.22 a barrel on the London-based ICE Futures Europe exchange.
U.S. Jobs
The European benchmark contract traded at a premium of $14.89 a barrel to U.S. futures, little changed from yesterday. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. The spread averaged 76 cents last year.
Chevron’s Pembroke refinery is “fully operational” after an explosion yesterday, Isabelle Guerin, a Chevron spokeswoman based in London, said today. The blast was at an empty storage tank, Paul Bray, a company spokesman, said by telephone. The plant, which has a capacity of 210,000 barrels a day, processes oil from the North Sea, Russia and West Africa, according to Chevron’s website.
U.S. job growth probably slowed to 165,000 new employees in May from 244,000 in April, a Bloomberg News survey of economists showed before today’s Labor Department report.
“If analysts are correct, May would mark the smallest increase since January, a month which traditionally sees low hiring,” said Stephen Schork, president of The Schork Group Inc. in Villanova, Pennsylvania, in a report today. “Put simply, we are expecting extreme volatility around the number’s release at 8:30 a.m. Expect the Nymex pits to open wild.”
Jobless Claims
Initial jobless claims in the week ended May 28 fell by 6,000 to 422,000, above the 417,000 median forecast of economists surveyed by Bloomberg News, according to Labor Department figures yesterday in Washington.
OPEC will probably maintain production levels for an eighth consecutive meeting next week, resisting calls to ease the pressure of $100-a-barrel oil on the global economy, according to a survey of analysts by Bloomberg News.
“Speculation on what the future may hold” is the main reason for the current oil price, Saudi Arabia’s Al-Naimi said in Krakow, Poland. “There is no such thing as a fair price.”
Oil fell in intraday trade yesterday after a U.S. Department of Energy report showed crude stockpiles climbed 2.88 million barrels to 373.8 million last week, the highest since May 2009. Supplies were projected to fall by 1.6 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline inventories increased for a fourth week, climbing by 2.55 million barrels to 212.3 million, the report showed. Analysts expected a gain of 900,000 barrels, according to the Bloomberg survey. Demand increased 4.5 percent to 9.43 million barrels a day.
Distillate stockpiles, which include diesel and heating oil, fell 976,000 barrels to 140.1 million, the lowest level since April 2009. Analysts forecast a withdrawal of 250,000 barrels.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
