Oil creep higher after US payrolls data

2nd July 2010, Comments 0 comments

World oil prices edged higher on Friday after mixed jobs data in the United States -- the world's biggest energy consuming nation.

New York's main contract, light sweet crude for August delivery, gained just three cents to 72.98 dollars.

Brent North Sea crude, also for August delivery, added a marginal four cents to 72.38 dollars.

Ahead of a US public holiday on Monday, oil rose in value as traders digested a mixed June employment report showing the economy shed more jobs than expected and a surprise dip in the unemployment rate.

"June's employment report supports other evidence showing that the economy has lost some momentum in recent months, but it is not yet collapsing," said economist Paul Dales at British consultancy Capital Economics.

"The United States can therefore enjoy the Independence Day holiday weekend in less fear of an imminent double-dip recession."

The American economy shed 125,000 jobs in June, after adding an upwardly revised 433,000 nonfarm payrolls in May, official data showed. Most analysts had expected a loss of 100,000 jobs.

The unemployment rate fell to 9.5 percent from 9.7 percent, instead of the anticipated rise to 9.8 percent, as workers exited the work force.

Meanwhile, China said Friday its red-hot economy had expanded by 9.1 percent in 2009, upwardly revised from an earlier figure of 8.7 percent.

But the revision comes ahead of second-quarter data due this month that is expected to show the world's second-biggest energy consumer slowed in the three months to June.

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

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 (Thursday) 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 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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