Oil prices rise as traders eye US data

4th June 2010, Comments 0 comments

Crude oil prices advanced on Friday as traders awaited the crucial US payrolls report in the world's biggest energy consuming nation.

New York's main contract, light sweet crude for delivery in July, climbed 32 cents to 74.93 dollars a barrel.

London's Brent North Sea crude for July gained 66 cents to 76.07 dollars per barrel.

Focus will be on a US Labor Department report, due at 1230 GMT, which will reveal job creation and unemployment figures for May -- giving a much clearer idea of the state of the country's economic recovery.

Most analysts expect the government will report 500,000 non-farm jobs were created last month, up from 290,000 in April, as the economy mounts a slow recovery from recession.

Unemployment in the world's biggest energy consuming nation was expected to dip to 9.8 percent from 9.9 percent in April.

Oil had surged on Thursday after a weekly oil inventories report from the US government's Department of Energy (DoE) showed a larger-than-expected dip in US gasoline inventories, indicating stronger demand.

Gasoline or petrol reserves plunged by 2.6 million barrels to 219 million barrels in the week ending May 28, the DoE said. Most analysts had forecast a drop of 700,000 barrels.

"Indications that US oil demand is on the rise helped oil prices move higher," said PVM analyst David Hufton.

"Adding to the bullish mix is the prospect of an active hurricane season, the potential supply fallout from the (BP) incident and Middle Eastern tensions."

"Most important of all ... US economic indicators have been positive and there is optimism that today's non-farm payroll data will show the fifth consecutive week of increases."

Crude oil inventories sank by 1.9 million barrels last week, according to the DoE, in line with market expectations.

The report, normally published on Wednesdays, was delayed a day because of Monday's observance of the Memorial Day public holiday.

Oil was lifted this week by encouraging US economic data which helped offset deep concerns that Europe's debt and deficit crisis would sap growth.

Strong US home and auto sales figures on Wednesday had bolstered hopes the US economy was on track after recent fears that the recovery could be slowing after sharp gains in 2009.

At the start of the week, however, oil prices fell as series of sluggish European and Chinese economic indicators sparked concerns about energy demand.

Crude futures sank on Tuesday after official data showed that that the eurozone unemployment rate rose to a record 10.1 percent in April from 10.0 percent the prior month.

Eurozone manufacturing activity slowed in May to a level not seen since the collapse of US investment bank Lehman Brothers in September 2008, according to a purchasing managers index (PMI) compiled from an industry survey.

The euro fell to a four-year low against the dollar at almost 1.21 dollars, helping to dampen demand for dollar-priced oil.

And in China, the world's second-biggest energy consumer, manufacturing activity slowed in May as government brakes to keep the economy from overheating kicked in, HSBC bank data showed.

A separate survey released by a Chinese government agency on Tuesday showed manufacturing activity had dropped to 53.9 in May from 55.7 in April.

Weakness in China unsettles the oil market, which is depending on the Asian giant as the leading driver of growth in global energy demand amid a fragile recovery from recession.

© 2010 AFP

0 Comments To This Article