Oil stable as traders await vital US payrolls data

2nd July 2010, Comments 0 comments

World oil prices held steady on Friday as traders sat on their hands before the latest crucial piece of economic data from key energy consuming nation the United States.

New York's main contract, light sweet crude for August delivery, shed just one cent to 72.94 dollars.

Brent North Sea crude, also for August delivery, added a marginal eight cents to 72.42 dollars.

The patchy US economic recovery faces a crucial litmus test later on Friday, at 1230 GMT, when fresh unemployment figures are released -- but few expect positive results.

Most analysts say the ranks of jobless Americans are likely to have swollen to more than 15 million, pushing the unemployment rate from 9.7 percent to 9.8 percent.

Oil has slumped this week as weak data has sparked widespread fears about the strength of the global economic recovery.

"Worse than expected US economic data increased the concerns about an economic recovery and lead to massive selling pressure on the commodity markets," said Commerzbank analyst Carsten Fritsch.

"This could continue today if the US labour market data will also not satisfy the expectations."

Trade has been particularly hard hit by weak data out of the United States and China, the world's number one and two energy users respectively.

Prices dived by almost three dollars on Thursday, hammered by a batch of weak economic data on the first day of the third quarter of 2010.

"The start to the new quarter saw more pain for the oil market," said VTB Capital analyst Andrey Kryuchenkov.

"Crude prices tumbled yesterday after even more downbeat data from the United States.

"The market was already under pressure in early trading on worries of slowing growth in China.

"However, exceptionally weak US June Manufacturing PMIs, rising weekly jobless claims and a sharp contraction in May pending home sales were the last straws."

Separate surveys this week showed slowing growth in manufacturing activity in China during June.

The HSBC China Manufacturing PMI, or purchasing managers index, fell to 50.4 last month from 52.7 in May, the bank said.

A Chinese government agency said its PMI fell to 52.1 from 53.9 the previous month. A 50 reading is the breakeven point between growth and contraction.

The United States, the world's biggest energy consumer, provided a drumbeat of bad indicators that further rattled market sentiment.

The US manufacturing sector, which has been driving the almost year-old fragile economic recovery from recession, grew for the 11th straight month in June but at a slower pace than expected, an industry survey showed.

The Institute of Supply Management (ISM) said its PMI slipped to 56.2 percent from 59.7 percent in May.

New claims for US unemployment benefits jumped more than expected last week, official data showed Thursday on the eve of the key June jobs report.

And pending US home sales plunged 30 percent in May after the expiration of an April 30 tax-credit deadline, more than twice as much as analysts expected.


© 2010 AFP

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