.Oil prices slip as US unemployment jumps
VIENNA, Austria (AP) — Worries about global economic growth and a U.S. jobs report showing unemployment is at its highest in 16 years pushed oil prices lower Friday.
Friday's labor market report stoked fears that the world's largest economy has not yet reached a bottom, with the U.S. unemployment rate bolting to 7.2 percent in December, the highest since early 1993.
The report was even more dismal when viewed over the whole year, with the U.S. economy losing 2.6 million jobs in 2008. That was the most since 1945, when nearly 2.8 million jobs were lost, although the number of jobs in the U.S. has more than tripled since then.
Light, sweet crude for February delivery was down $1 at $40.70 barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. The contract overnight fell 93 cents to settle at $41.70.
Before being depressed by economic news, oil prices had risen earlier this week to above $48 on worries the conflict in Gaza could engulf the oil-rich Middle East.
Lebanese militants fired at least three rockets into northern Israel on Thursday, threatening to open a new front for the Jewish state as it pushed forward with an offensive against Hamas in the Gaza Strip that has killed about 700 people. Israel responded with mortar shells.
"Some traders may be nervous fighting could spread," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "Iran has been racheting up the rhetoric."
Top Iranian leader Ayatollah Ali Khamenei said Thursday his country would not spare any effort to assist Hamas, though he banned hardline student groups from carrying out suicide bombings in Israel.
An Iranian Revolutionary Guard commander earlier this week called on Islamic countries to use oil as a weapon to end the fighting in Gaza.
Oil prices fell the previous two trading sessions on expectations a severe global economic slowdown will undermine crude demand and evidence that an increasing number of OPEC members were cutting back on production.
Focusing on OPEC, oil and energy consultants KBC Market Services said it appeared "OPEC is now doing enough on supply to compensate for the fall in global oil demand."
"However, the market may not be convinced of sufficient compliance until OPEC production data for January become available early next month."
Part of the subdued market mood Friday also appeared to stem from dire economic warnings from U.S. President-elect Barack Obama.
On Thursday, Obama said the recession in the U.S. could "linger for years" unless Congress approves a spending package and tax cuts that will cost as much as $1 trillion.
Dismal reports from retailers also heightened fears that consumer demand will continue to weaken.
Wal-Mart, the largest retailer in the U.S., slashed its fourth-quarter earnings forecast and reported sales below analyst expectations. Department store operator Macy's Inc. said it will close 11 stores in nine states — affecting 960 employees — and also lowered its forecast for the fourth quarter.
"Demand is bad — that's the underlying reality," Chu said. "Unless there's a major shock, the market will likely drift back down below $40."
In other Nymex trading, gasoline futures slipped by less than a penny to fetch $1.09 a gallon. Heating oil fell more than 5 cents, selling at $1.47 a gallon while natural gas for February delivery lost more than 7 cents at $5.51 per 1,000 cubic feet.
In London, February Brent crude was a $44.81 a barrel on the ICE Futures exchange — down 86 cents.
AP
Friday's labor market report stoked fears that the world's largest economy has not yet reached a bottom, with the U.S. unemployment rate bolting to 7.2 percent in December, the highest since early 1993.
The report was even more dismal when viewed over the whole year, with the U.S. economy losing 2.6 million jobs in 2008. That was the most since 1945, when nearly 2.8 million jobs were lost, although the number of jobs in the U.S. has more than tripled since then.
Light, sweet crude for February delivery was down $1 at $40.70 barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. The contract overnight fell 93 cents to settle at $41.70.
Before being depressed by economic news, oil prices had risen earlier this week to above $48 on worries the conflict in Gaza could engulf the oil-rich Middle East.
Lebanese militants fired at least three rockets into northern Israel on Thursday, threatening to open a new front for the Jewish state as it pushed forward with an offensive against Hamas in the Gaza Strip that has killed about 700 people. Israel responded with mortar shells.
"Some traders may be nervous fighting could spread," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "Iran has been racheting up the rhetoric."
Top Iranian leader Ayatollah Ali Khamenei said Thursday his country would not spare any effort to assist Hamas, though he banned hardline student groups from carrying out suicide bombings in Israel.
An Iranian Revolutionary Guard commander earlier this week called on Islamic countries to use oil as a weapon to end the fighting in Gaza.
Oil prices fell the previous two trading sessions on expectations a severe global economic slowdown will undermine crude demand and evidence that an increasing number of OPEC members were cutting back on production.
Focusing on OPEC, oil and energy consultants KBC Market Services said it appeared "OPEC is now doing enough on supply to compensate for the fall in global oil demand."
"However, the market may not be convinced of sufficient compliance until OPEC production data for January become available early next month."
Part of the subdued market mood Friday also appeared to stem from dire economic warnings from U.S. President-elect Barack Obama.
On Thursday, Obama said the recession in the U.S. could "linger for years" unless Congress approves a spending package and tax cuts that will cost as much as $1 trillion.
Dismal reports from retailers also heightened fears that consumer demand will continue to weaken.
Wal-Mart, the largest retailer in the U.S., slashed its fourth-quarter earnings forecast and reported sales below analyst expectations. Department store operator Macy's Inc. said it will close 11 stores in nine states — affecting 960 employees — and also lowered its forecast for the fourth quarter.
"Demand is bad — that's the underlying reality," Chu said. "Unless there's a major shock, the market will likely drift back down below $40."
In other Nymex trading, gasoline futures slipped by less than a penny to fetch $1.09 a gallon. Heating oil fell more than 5 cents, selling at $1.47 a gallon while natural gas for February delivery lost more than 7 cents at $5.51 per 1,000 cubic feet.
In London, February Brent crude was a $44.81 a barrel on the ICE Futures exchange — down 86 cents.
AP
posted by madtom at 7:38 PM
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