May 19, 2011 / 6:48 AM / in 8 years

Oil slumps on weak jobs data, IEA output call

NEW YORK (Reuters) - Oil prices fell more than $1 on Thursday as weak U.S. economic data stoked worries about demand, and the International Energy Agency suggested members could release emergency stocks if OPEC failed to act.

An employee holds a gas pump to refill a car at a petrol station in central Seoul April 6, 2011. REUTERS/Lee Jae-Won

The pull-back coincided with a broad decline across commodity markets, which are testing price floors following several weeks of volatile trade.

Oil volume was light at a quarter less than the 30-day average, suggesting many traders remained on the sidelines. The oil volatility index .OVX dipped to its lowest since May 5 as demand for options protection ebbed.

U.S. crude for June delivery settled $1.66 lower at $98.44, a day after rebounding when some buyers scooped up bargains. Prices touched a session high of $100.79, trading in a narrow range of between $96 to $101 for a sixth day.

“Some of the new longs that came into the market after the recent fall of about $20 a barrel are selling as the U.S. economic data this morning wasn’t supportive,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

“The recent buyers pushed prices back to over $100, but they were disappointed with the data on weekly jobless claims and regional manufacturing and are bailing out,” he added.

In London, ICE Brent for July delivery settled down 88 cents at $111.42, off the early session high of $113.04.

U.S. data showed weekly jobless benefit filings fell last week, yet claims remained above 400,000 for the sixth straight week, sparking labor market concerns.

Other data showed sales of previously owned U.S. homes fell in April while factory activity in the U.S. mid-Atlantic region grew much more slowly than expected this month, raising more concerns about economic growth.

Still, with unemployment down from a year ago there was some evidence that U.S. drivers were taking near-record $4 gasoline prices in stride.

Americans will cut other expenses rather than forsake highway holidays this Memorial Day weekend, travel group AAA said on Thursday, forecasting that the number of people hitting the road would be little changed from 2010.

The 19-commodity Reuters-Jefferies CRB index .CRB, a global benchmark for commodities, was down 1.4 percent, heading for its largest loss in a week.

IEA URGES PRODUCERS TO PUMP MORE

Concerned that high oil prices would dent the fragile global economic recovery, the Paris-based International Energy Agency urged oil producers to boost supply to cut fuel costs.

IEA, a watchdog for 28 industrialized nations, suggested its members could release emergency stockpiles if OPEC failed to act, although U.S. officials played down prospects for using the Strategic Petroleum Reserve to tamp down prices.

The IEA statement, issued after its governing board met, was an unusual comment on producer policies, analysts said. The statement came ahead of OPEC’s next policy meeting on June 8.

The 12-member Organization of the Petroleum Exporting Countries maintains that world oil supplies are adequate.

“The IEA is part of the equation today. Investors have to be saying to themselves, ‘hey, they could be serious about pulling the trigger on reserves’,” said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

Also weighing on prices, UK consultancy Oil Movements forecast that seaborne oil exports from OPEC, excluding Angola and Ecuador, will rise by 420,000 barrels per day in the four weeks to June 4.

An unexpected drop in U.S. crude oil inventories last week and a large drop in stockpiles at the key Cushing, Oklahoma, delivery point for the U.S. oil futures contract further supported Wednesday’s rally.

Additional reporting by Robert Gibbons in New York; Zaida Espana in London; Florence Tan in Singapore; Editing by David Gregorio and Jonathan Leff

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below