Oil eases but holds above $70
Tuesday, 11 August 2009
SINGAPORE, Aug 10 (AFP): Oil was down in Asian trade today after the dollar strengthened on the back of better-than- expected US unemployment data.
In morning trade, New York's main contract, light sweet crude for September, fell 39 cents to 70.54 dollars a barrel. It shed 1.01 dollars to settle at 70.93 dollars in New York trade Friday.
Brent North Sea crude for delivery in September dipped 29 cents to 73.30 dollars.
The US Labor Department said Friday that the US jobless rate fell one tenth of a point to 9.4 per cent in July as job losses narrowed to 247,000 from 443,000 in June.
The data was better than the 325,000 job losses projected by private economists, and boosted the US dollar after the market interpreted it as another sign that the recession-hit US economy is on the mend.
The US currency has mostly been regarded as a safe haven unit sought by investors seeking cover against risk, but Friday's market action showed a shift in tone.
Oil is traded in US dollars and a stronger American currency makes the commodity more expensive, leading to slower demand and pulling down prices.
Despite the positive numbers, analysts cautioned against reading too much in them, noting that any recovery for the world's biggest economy would take time.
"July's US employment report was stronger than expected, but in any other recession job losses of this magnitude would be treated as a disaster," said research house Capital Economics.
Victor Shum, senior principal at energy consultancy Purvin and Gertz in Singapore, said weak energy demand will continue to impact on oil prices which have gained momentum recently on hopes of an early recovery from the economic downturn.
"In the near term we may see some retreat in oil," Shum said.
Oil reached an all-time peak of more than 147 dollars a barrel in July last year before plummeting after the economic slump that started in the second half of 2008 smashed energy demand.
In morning trade, New York's main contract, light sweet crude for September, fell 39 cents to 70.54 dollars a barrel. It shed 1.01 dollars to settle at 70.93 dollars in New York trade Friday.
Brent North Sea crude for delivery in September dipped 29 cents to 73.30 dollars.
The US Labor Department said Friday that the US jobless rate fell one tenth of a point to 9.4 per cent in July as job losses narrowed to 247,000 from 443,000 in June.
The data was better than the 325,000 job losses projected by private economists, and boosted the US dollar after the market interpreted it as another sign that the recession-hit US economy is on the mend.
The US currency has mostly been regarded as a safe haven unit sought by investors seeking cover against risk, but Friday's market action showed a shift in tone.
Oil is traded in US dollars and a stronger American currency makes the commodity more expensive, leading to slower demand and pulling down prices.
Despite the positive numbers, analysts cautioned against reading too much in them, noting that any recovery for the world's biggest economy would take time.
"July's US employment report was stronger than expected, but in any other recession job losses of this magnitude would be treated as a disaster," said research house Capital Economics.
Victor Shum, senior principal at energy consultancy Purvin and Gertz in Singapore, said weak energy demand will continue to impact on oil prices which have gained momentum recently on hopes of an early recovery from the economic downturn.
"In the near term we may see some retreat in oil," Shum said.
Oil reached an all-time peak of more than 147 dollars a barrel in July last year before plummeting after the economic slump that started in the second half of 2008 smashed energy demand.