Oil off highs as US sheds jobs
Saturday, 8 September 2007
LONDON, Sept 7 (Reuters): Oil handed back early gains to trade around $76 a barrel on Friday after data showed the U.S. economy shed 4,000 jobs in August, raising fears of faltering economic growth in the world's top energy consumer.
The shock drop in hiring, the first time in four years and against market expectations of 110,000 job additions, sent the dollar and world stocks tumbling, pulling down oil prices too.
U.S. crude fell 15 cents to $76.12 a barrel by 1256 GMT, after hitting highs of $76.73 earlier in the session, placing it within sight of its record high of $78.77. London Brent crude was 29 cents down at $74.48.
"This may be the canary in the coal mine as far as demand (is concerned) going forward," said John Kilduff, senior vice president at MF Global.
"Certainly in the past years, with high oil prices, we've always pointed to employment numbers holding up as a reason oil demand was not being hit."
Oil rose earlier on renewed tension in the Middle East compounded by supply worries in the United States after further declines in weekly fuel inventories.
Crude inventories in top consumer the United States fell by a higher-than-expected 3.9 million barrels last week. Syria accused Israel of bombing its territory Thursday and warned it could respond.
Thursday's weekly report on U.S. fuel inventories also showed gasoline sank 1.5 million barrels to the lowest in two years, following a series of outages in the ageing U.S. refining system.
Adding to supply worries was tension in the Middle East, the source of nearly a third of world oil.
U.S. crude has climbed about 3 percent this week to near the record high of $78.77 hit on Aug. 1.
"Recent price action appears a good reflection of the current market environment characterised by a combination of firming fundamentals, geopolitical tensions and growing nervousness ahead of next week's OPEC meeting," Barclays Capital said in a report.
The shock drop in hiring, the first time in four years and against market expectations of 110,000 job additions, sent the dollar and world stocks tumbling, pulling down oil prices too.
U.S. crude fell 15 cents to $76.12 a barrel by 1256 GMT, after hitting highs of $76.73 earlier in the session, placing it within sight of its record high of $78.77. London Brent crude was 29 cents down at $74.48.
"This may be the canary in the coal mine as far as demand (is concerned) going forward," said John Kilduff, senior vice president at MF Global.
"Certainly in the past years, with high oil prices, we've always pointed to employment numbers holding up as a reason oil demand was not being hit."
Oil rose earlier on renewed tension in the Middle East compounded by supply worries in the United States after further declines in weekly fuel inventories.
Crude inventories in top consumer the United States fell by a higher-than-expected 3.9 million barrels last week. Syria accused Israel of bombing its territory Thursday and warned it could respond.
Thursday's weekly report on U.S. fuel inventories also showed gasoline sank 1.5 million barrels to the lowest in two years, following a series of outages in the ageing U.S. refining system.
Adding to supply worries was tension in the Middle East, the source of nearly a third of world oil.
U.S. crude has climbed about 3 percent this week to near the record high of $78.77 hit on Aug. 1.
"Recent price action appears a good reflection of the current market environment characterised by a combination of firming fundamentals, geopolitical tensions and growing nervousness ahead of next week's OPEC meeting," Barclays Capital said in a report.