U.S. nonfarm payrolls probably fell by 167,000 in September
FRANKFURT (MarketWatch) -- Oil futures fell below $70 a barrel early Friday, as economic concerns dominated sentiment ahead of a key report on the state of the U.S. labor market.
Crude oil for November delivery dropped 98 cents, or 1.3%, to $69.84 a barrel in electronic trading on Globex. The contract earlier hit an intraday low of $69.62 a barrel.
"The spot-month futures contract has spent a great deal of time consolidating near $70," said Darin Newsom, senior analyst at commodities-information provider DTN.
"However, the underlying fundamentals indicated by the contango in the futures spreads remain bearish," Newsom said in emailed comments.
Contango is a situation where prices for oil delivered in the future are higher than prices for near-term delivery.
Newsom expects crude oil to trade in the mid-$50 range "due to seasonal pressure and continued bearish underlying fundamentals by early 2010."
Oil futures ended slightly higher on Thursday, while natural-gas futures tumbled 7.7% after the government reported that U.S. inventories hit a new record high last week.
Traders are eagerly awaiting a report on the labor market in September which is due at 8:30 a.m. Eastern time on Friday.
Economists project that U.S. nonfarm payrolls probably fell by 167,000 in the month to about 131 million, marking the 21st consecutive month of falling employment.
While 167,000 job losses represent a big decline, such a number is still an improvement from the 741,000 jobs lost in January. Read more.
Also on Globex, November reformulated gasoline fell 2 cents, or 1.4%, to $1.73 a gallon and November heating oil dropped 2 cents to $1.80 a gallon.
November natural-gas futures gained 1 cent to $4.47 per million British thermal units.
Russia's oil output rises
Russia produced more than 10 million barrels per day of crude oil in September, setting a new monthly record, Reuters reported Friday, citing data from the Energy Ministry in Moscow.
Russian production rose 0.4% to 10.01 million barrels per day in September from the 9.97 million barrels per day produced in August, the report said.
In late August, state-controlled oil giant Rosneft (OJSCF 7.80, +0.20, +2.63%) started commercial production of crude oil at the Vankor field in the Arctic, helping boost Russian oil production in September, according to the report.
