Americas News
Oil Rally Stalls As Decline In U.S. Job Openings Spooks Traders
Oil prices on Wednesday continued to hover in the $80 range, with traders cautiously weighing the effects of a huge draw in U.S. stockpiles against ongoing reports that fuel concerns of deteriorating economic conditions.
Brent settled up 5 cents, or 0.1 percent, at $84.99 per barrel, while West Texas Intermediate settled down 10 cents, or 0.1 percent, at $80.61 per barrel.
This was a huge departure from Monday, when the commodity shot up over 6 percent after the Organization of the Petroleum Exporting Countries (OPEC) and allies announced a surprise cut of about 1.16 million barrels per day (bpd).
News that U.S. crude inventories fell 3.7 million barrels last week compared to expectations for a 1.5 million barrel draw, combined with gasoline and distillate stocks also falling more than anticipated (by 4.1 million barrels and 3.6 million barrels respectively) should have presumably added to the price surge.
Giovanni Staunovo, analyst at UBS, theorized, "Maybe following the strong price rally this week, investors are a bit cautious on jumping on a strong report."
What spooked traders was U.S. job openings in February reportedly dropping by 632,000 to 9.9 million, the lowest level in nearly two years, and this caused Craig Erlam, senior markets analyst at OANDA, to state, "(The data) could be the first signs of weakness in the U.S. labour market and that is huge.
"Without it, [the Federal Reserve] will find it very hard to make the argument that it is pausing the tightening cycle."
Rebecca Babin, a senior energy trader at CIBC Private Wealth, put a slightly different spin on the situation: she said, "The rally in crude is likely to be contained in the face of soft economic readings," but she added that Brent would likely outperform in the short term due to robust demand in Asia and the OPEC cuts taking effect.
