MW: Oil slides 4%, tumbling below $100 after jobs data
Prices extend losses after weak U.S. employment report
By Claudia Assis and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures on Friday fell to their lowest since mid-February as data showed that the U.S. economy created fewer jobs than expected in April, adding to worries about the health of the recovery.
Crude for June delivery CLM2 -4.23% dropped $4.32, or 4.2%, to $98.21 a barrel on the New York Mercantile Exchange. Weekly losses were hovering above 6%.
“The jobs data was the bulls’ last hope. Now the market realizes that with a slowing economy and weak demand we might drown in an ocean of supply,” said Phil Flynn, a vice president with PFGBest in Chicago.
Oil added to earlier losses after the Labor Department reported that U.S. nonfarm payrolls expanded 115,000 last month, shy of the 163,000 expected by the economists surveyed by MarketWatch. Employment gains for March and February were revised higher from previous estimates, however. Read more about the employment report.
“There’s no way to explain away this report, there’s no excuse to these numbers,” said James Cordier, a portfolio manager with Optionsellers.com in Florida. “The U.S. economy is slowing, no one is arguing that anymore.”
Disappointing economic data tend to raise concerns about the strength of the economy and oil demand in the U.S., the world’s largest consumer of oil.
Oil futures were already trading lower ahead the jobs report, extending losses from the preceding session. Crude closed at its lowest level in two weeks Thursday, tumbling $2.68, or 2.6%, to settle at $102.54 a barrel.
Record high levels of inventories continued to weigh on markets. Wednesday’s U.S. inventories report revealed another big rise in stockpiles, the sixth in a row, putting crude supplies at a 21-year high.
Traders also sorted out a change in exchange rules prompted by new Commodity Futures Trading Commission regulations in commodity trading.
The new rules, which will increase the money needed to trade futures for some exchange members, are set to go into effect in 90 days, and not Monday as previously expected.
The CME Group, the U.S. top exchange for futures, said in a news release late Thursday it had sought and received the 90-day extension to “work with the CFTC to address member-customer concerns.”
Meanwhile, the broader suite of energy futures tracked oil lower. Gasoline for June delivery RBM2 -2.94% fell 9 cents, or 3.1%, to $2.96 a gallon. June heating-oil futures HOM2 -3.11% dropped 10 cents, or 3.2%, to $2.99 a gallon.
June natural-gas futures NGM12 -2.05% shed 5 cents, or 2.1%, to $2.29 per million British thermal units.
Claudia Assis is a San Francisco-based reporter for MarketWatch. Polya Lesova in New York contributed to this report.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
