Oil prices slide further on US payrolls report

8th July 2011, Comments 0 comments

World oil prices sank on Friday as traders took profits from the recent rally and digested disappointing payrolls data from top global crude consumer the United States.

New York's main contract, West Texas Intermediate for delivery in August, tumbled $2.40 to $96.27 a barrel, after gaining $2.02 on Thursday.

Brent North Sea oil for August dropped 55 cents to $118.04, giving back only some of Thursday's $4.97 jump.

The US economy created a paltry 18,000 jobs in June, well short of modest forecasts for 80,000, pushing the unemployment rate up to 9.2 percent and signalling that US growth stayed very weak during the second quarter.

The data was a letdown for investors who had hoped that the world's biggest economy was getting back on track.

"An absolutely awful June labour market report from the US and one that will have rocked markets more than usual given the improved expectations for employment following the strong ADP figures," ING economist Rob Carnell said.

Markets rose sharply Thursday after US payrolls firm ADP said that private businesses added 157,000 jobs in June, a solid jump after the weak 36,000 job increase in May.

The ADP figures raised expectations for Friday's much-awaited US non-farm payrolls (NFP) data for June.

Sentiment was also bolstered by news German industrial production jumped in May, gaining 1.2 percent following a decline of 0.8 percent in April.

"Oil prices rose (Thursday) on increased optimism over the world economy," said Westhouse Securities analyst Peter Bassett.

"This optimistic mood has been somewhat tempered this morning by the delayed reaction to (Thursday's) official US stock figures," he added.

US crude inventories fell 900,000 barrels in the week ending July 1. That was well short of market forecasts for a heavy 2.4-million-barrel drop.

US gasoline (petrol) reserves fell 600,000 barrels last week. That confounded expectations for a gain of 200,000 barrels and indicated stronger demand as prices fell and summer vacations began.


© 2011 AFP

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