OIL FUTURES: Crude Oil Falls As Economic Outlook Worsens
04 May 2012 - 2:30AM
Dow Jones News
Crude-oil futures deepened their selloff Thursday as traders
digested a slew of weak economic headlines and news of rising U.S.
crude-oil stockpiles.
Light, sweet crude oil for June delivery fell $2.21, or 2.1%, to
$103.01 a barrel on the New York Mercantile Exchange, after
spending much of the morning unchanged.
Brent crude oil on ICE Futures Europe fell $1.73, or 1.5%, to
$116.47 a barrel.
Traders and analysts said they are bracing for what is likely to
be a weak reading Friday of U.S. employment. Expectations are low
after payrolls giant Automatic Data Processing Inc. (ADP) on
Wednesday said fewer than expected jobs were added to the U.S.
economy in April.
"It's a combination of less-than-encouraging macroeconomic
headlines, and I think you're getting some money taken off the
table ahead of [Friday'] jobs report," said Stephen Schork, editor
of The Schork Report, an energy newsletter.
ADP said only 119,000 private-sector jobs were created in April,
far below the 175,000 jobs expected.
Meanwhile, outplacement firm Challenger, Gray & Christmas
Inc. earlier Thursday said U.S. employers planned to cut 40,559
jobs in April, an 11% increase from a year ago.
Oil-market participants keep a close eye on employment data for
signs on oil and fuel demand. High unemployment in the U.S., the
world's biggest oil consumer, has been a major factor behind the
slump in demand for gasoline because it means fewer motorists
traveling to work or taking vacations.
Separately, the Energy Information Administration said Wednesday
that U.S. oil inventories last week rose to their highest level
since September 1990. The EIA said inventories rose by a
greater-than-expected 2.8 million barrels during the week, with
stockpiles now at their 19th highest level on record.
Crude-oil inventories at Cushing, Okla., the oil hub that sets
the price for the benchmark U.S. contract, are at a record high,
the EIA said.
"Cushing continues to build crude storage, but at the same time
it continues to build crude," said Tony Rosado, broker at GA Global
Markets.
Prices have yet to catch up with the fundamentals of the oil
market, some analysts have said. The last time U.S. oil stocks were
higher than current levels, Nymex crude was fetching $30 a
barrel.
The weak U.S. economy is likely to keep oil demand weak for the
near future, said Dominick Chirichella, analyst at the Energy
Management Institute.
"All signs continue to point to the U.S. economy moving into
another slow patch," he said. "I expect oil consumption to remain
in a contraction trend that has been in place since 2007."
Front-month June reformulated gasoline blendstock, or RBOB,
recently fell 1.42 cents, or 0.5%, to $3.0615 a gallon. June
heating oil fell 4.49 cents, or 1.4%, to $3.0976 a gallon.
-By Dan Strumpf, Dow Jones Newswires; 212-416-2818;
dan.strumpf@dowjones.com.