BLBG: Oil Declines as U.S. Cuts More Jobs Than Forecast, Stocks Drop
By Alexander Kwiatkowski
Oct. 2 (Bloomberg) -- Crude oil dropped, tracking global equity markets, after a report showed the jobless rate in America climbed to a 26-year high in September.
Oil snapped two days of increases as equities slumped around the world. U.S. employers cut more jobs than forecast last month, according to a Labour Department report, raising concern that consumer spending won’t increase fuel demand. Crude is still set for a weekly increase after gasoline supplies dropped unexpectedly.
“Economic indicators are very important and there is still a lot of speculation on what oil demand will be next year,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna, said before the jobs report. “Equity markets are declining and the crude market is declining as well.”
Crude oil for November delivery dropped as much as $1.96, or 2.8 percent, to $68.86 a barrel in electronic trading on the New York Mercantile Exchange, and was at $69.21 at 1:43 p.m. London time.
The U.S. unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was less than previously reported.
“We are transitioning away from the green shoot environment which was confirmation of a bottoming of prices to an environment where a confirmation of growth needs to be shown,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix GmbH. “There is no clear evidence of that yet.”
Stock Indexes
Stock markets around the world dropped, pulling oil lower. Futures on the Standard & Poor’s 500 Index expiring in December slid 1 percent to 1,017.5 at 8:31 a.m. in New York after the Labor Department report.
Oil is still set for a weekly rise, paring last week’s 8.4 percent loss, after gasoline supplies unexpectedly dropped. Inventories of the motor fuel declined by 1.66 million barrels, or 0.8 percent, last week, the Energy Department said in a Sept. 30 report. Stockpiles were forecast to rise 1 million barrels.
Russia increased oil output 1.7 percent to a post-Soviet high in September from a year earlier after OAO Rosneft brought a new field on line in August. Russian oil production rose to 10.01 million barrels a day from 9.84 million barrels a day in September last year, the Energy Ministry’s CDU-TEK unit said in an e-mailed statement today.
Brent crude oil for November settlement dropped as much as $1.91, or 2.8 percent, to $67.28 a barrel on the London-based ICE Futures Europe exchange. It traded at $67.61 at 1:43 p.m. local time.
Crude oil futures may decline next week as refineries slow operations and demand decreases before the North American heating season begins, a Bloomberg News survey showed.
Fifteen of 31 analysts, or 48 percent, said futures will drop through Oct. 9. Six respondents, or 19 percent, forecast that the market will rise and 10 said prices will be little changed. Last week, 55 percent of analysts said oil would fall.
