Oil slips before US data

8th May 2015, Comments 0 comments

Oil drifted lower Friday on worries over rebounding US output and before key payrolls data, at the end of a rollercoaster week which saw the market hit five-month peaks.

US benchmark West Texas Intermediate (WTI) for June delivery nudged one cent lower to $58.93 a barrel.

Brent North Sea crude for June reversed 13 cents to $65.41 a barrel in London late morning deals.

"Oil prices are failing to profit from the robust Chinese import data," said Commerzbank analyst Carsten Fritsch.

"Some US oil producers have announced their intention to scale up their drilling activities again at higher oil price.

"The sharp decline in drilling activity in the US was one key reason for the price recovery over the last three months."

Crude futures had fallen heavily Thursday after soaring Wednesday on news of an unexpected slump in US crude reserves.

On Wednesday, Brent had hit $69.63 and WTI reached $62.58 -- the highest levels so far this year.

Crude stockpiles tumbled by 3.9 million barrels in the week to May 1, the US government's Department of Energy revealed. Analysts had expected an increase of 1.5 million barrels.

Despite the decline, however, at 487.0 million barrels of crude, the stockpiles were at their highest level on record for this time of year.

And US crude-oil production slipped only marginally to 9.4 million barrels per day.

Later on Friday, meanwhile, dealers will next scrutinise the US jobs report for April to gauge whether the world's biggest economy is strong enough for the Federal Reserve to begin raising ultra-low interest rates.

US employers likely added 228,000 workers to non-farm payrolls last month, after a 126,000 increase in March, according to economists surveyed by Bloomberg.

"The main focus remains on the key release of the US nonfarm payroll data and unemployment rate this afternoon," added Sucden analyst Myrto Sokou.

"Following the recent optimistic employment data ... it is expected that the US economy added 228,000 jobs in April," she added.

The data is a key focus for the oil market because the United States is the world's biggest crude consuming nation, followed by number two China.

Oil prices have in recent weeks also won support due to ongoing strife in Yemen and Libya.

However, prices remain well down after plunging almost 60 percent between June and the start of 2015 on the back of a global supply glut.

The problem was exacerbated in November when the OPEC cartel maintained output levels despite tumbling prices. The 12-nation group pumps about 30 percent of global crude.

© 2015 AFP

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