Oil slumps on fears over looming US payrolls data

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Báo Đầu Tư English - 31 month(s) ago 3 readings

Oil slumps on fears over looming US payrolls data

World oil prices slumped Thursday as weak US data sparked concern over this week's looming non-farm payrolls report, in a market also weighed down by ample American stockpiles.

World oil prices slumped Thursday as weak US data sparked concern over this week's looming non-farm payrolls report, in a market also weighed down by ample American stockpiles.

World oil prices slumped as weak US data sparked concern over this week's looming non-farm payrolls report, in a market also weighed down by ample American stockpiles. (AFP Photo/Lakruwan Wanniarachchi)

Brent North Sea crude for delivery in June tumbled to a three-month low point at $116.10 per barrel shortly after 1600 GMT. It later stood at $116.54, down $1.66 from Wednesday's closing level.

Elsewhere on Thursday, New York's main contract, light sweet crude or West Texas Intermediate (WTI) for June, sank $2.24 to $102.98 a barrel.

"Crude fell sharply today following a raft of disappointing economic data," said analyst David Morrison at trading group GFT.

"The selling of oil intensified as US traders arrived at their desks and there was no let-up even after US weekly jobless claims fell sharply, which was a sliver of good news and had investors hoping that tomorrow's non-farm payroll report may not be as poor as feared.

"However, the US non-manufacturing PMI was surprisingly weak, countering Tuesday's stronger manufacturing number."

The all important service sector of the US economy grew slower in April than March, the closely-watch ISM index showed Thursday, in another sign that the economy hit a rough patch last month.

The Institute for Supply Management's services index fell to 53.5 from 56.0, showing the services sector continues to expand, but only sluggishly.

The report contrasted with a pickup in growth last month in the much smaller manufacturing sector, as shown by ISM survey data reported earlier this week.

Earlier, the Labor Department reported new claims for US unemployment benefits dropped more quickly than expected last week.

But there was little in the way of jubilation after a string of poor data and ahead of Friday's crucial publications of official unemployment statistics for April.

Oil also slid Thursday as the OPEC oil producers' cartel, which pumps about one third of world crude supplies, indicated that it was working towards bringing prices down to sustainable levels.

"We are not happy with prices at this time," said Abdullah El-Badri, Secretary General of the Organization of Petroleum Exporting Countries (OPEC), at an energy conference in Paris on Thursday.

"We need to bring prices at a level which consumers and producers can live with."

"There is speculation on the market. We have plenty of oil on the market and we are working to bring the prices down," he added ahead of the cartel's next scheduled production meeting in Vienna next month.

Crude futures were also under pressure from plentiful crude stockpiles in top consuming nation the United States.

The market also sank Wednesday on profit-taking and as soaring US crude supplies indicated weaker demand in the world's biggest economy.

"Oil prices have come under pressure following publication of the US inventory data," said Commerzbank analyst Eugen Weinberg.

"According to the US Department of Energy, US crude oil stocks climbed 2.8 million barrels last week and are now at their highest level since September 1990.

"US crude oil stocks have risen by 29.5 million barrels since the end of March, their sharpest six-week increase since February 2009."

The DoE had also revealed that inventories in Cushing, Oklahoma -- the delivery point for New York's benchmark WTI futures contract -- rose 1.2 million barrels to hit a record high at almost 43 million barrels.

Traders also digested the latest monetary policy decisions from the European Central Bank, which kept interest rates at record lows but gave no indication of when or if it might give the eurozone economy a further boost.

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