Oil prices slip after late rebound

6th January 2011, Comments 0 comments

World oil prices dipped slightly on Thursday, after a late rebound on Wednesday that followed upbeat US labour market data and an unexpectedly big fall in American crude inventories.

Brent North Sea crude for delivery in February slid 21 cents to $95.27 a barrel in morning London deals.

New York's main contract, light sweet crude for February fell 35 cents to 89.95 dollars per barrel.

"Crude prices have declined modestly, partly in correction of yesterday's strong gains," said analyst Brenda Sullivan at the Sucden Financial Research brokerage in London.

The market had risen on Wednesday, rebounding from earlier declines as a sharp fall in US crude inventories added to the mood of recovery in the world's largest oil consuming nation.

Prices were supported by "better US economic data and a larger-than-expected 4.2-million-barrel fall in US crude oil inventories last week," the Commonwealth Bank of Australia said in a report.

The numbers, released by the US Department of Energy late on Wednesday, were almost double analysts' forecasts of a drop of 2.2 million barrels.

Meanwhile, US private hiring and service sector growth numbers also exceeded analysts' expectations and boosted confidence that the US economic recovery is on track.

Figures provided by private payrolls firm ADP showed the American private sector adding a seasonally adjusted 297,000 jobs in December.

That was more than triple the number created in November and above consensus forecasts of 100,000 new hirings.

Separately, the Institute of Supply Management said its non-manufacturing index rose 2.1 points to 57.1 percent last month.

Economists had forecast that the index would show a more moderate rise to 55.7 percent. Any figure above 50 signifies growth in the crucial sector.

Later on Thursday, oil market participants will digest US weekly jobless claims data, ahead of the crucial release of non-farm payrolls numbers on Friday.

"Markets will watch this afternoon's weekly jobless claims data to see if recent improvements (in oil prices) can be sustained, and perhaps set a tone before the more important monthly payrolls data to be released tomorrow," added Sullivan.

"Estimates average about 175,000 jobs created but opinions are widely divided."

© 2011 AFP

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