Americas News
Oil Down Again As Perceived Softening Of U.S. Labour Spooks Traders
Oil trading on Thursday revealed investors to be fully gripped by demand fears, with the commodity shedding over 2 percent and posting its third straight day of losses.
Bearish sentiment was also stoked by a rise in U.S. gasoline inventories.
Brent settled down $2.02, or 2.4 percent, at $81.10 per barrel, while West Texas Intermediate settled down $1.87, or 2.4 percent, at $77.29 per barrel.
The trigger for the demand fears this time out seemed to be reports that number of Americans filing new claims for unemployment benefits increased moderately last week: this suggested that the labour market was slowing after several interest rate hikes by the U.S. Federal Reserve.
Initial claims for unemployment benefits rose to a seasonally adjusted 245,000 for the week ended April 15, according to Washington, compared to expectations for a 240,000 claims.
Relatively ignored was an observation from Lou Crandall, chief economist at Wrightson ICAP: "This may be the high point for initial claims over the near term; the seasonal adjustment factors for the next couple of weeks appear to have a more generous bias, which is likely to pull the published level below the recent average."
But for fear obsessed traders, any spin on news is bad news: Reuters pointed out that adjusted claims at current levels "suggest employment growth remains strong," which may spur the Fed to raise rates again next month.
As for the U.S. stock builds, the Energy Information Administration reported that gasoline inventories jumped unexpectedly last week by 1.3 million barrels to 223.5 million barrels, and analysts noted that a substantial crude stock draw over the same time period could be easily reversed because the draw was related to a spike in export activity.
Dennis Kissler, senior vice president of trading at BOK Financial Securities, on Thursday pointed out that oil's price drop was accelerated by a technical correction known as gap fill, in which a spike in prices creates a breach in charts where numbers have moved sharply with little trading in between.
In referencing the wake of the price spike that occurred due to the Organization of the Petroleum Exporting Countries (OPEC) recently announcing its surprise output cut, Kissler said, "After a gap like that occurs, more times than not, the market will migrate downwards."
Also on Thursday, a Washington official told media that the U.S. could start to replenish its Strategic Petroleum Reserve in the early fall, but it will depend on infrastructure maintenance and how well a planned sale of 26 million barrels by the end of June can be managed.
