CH: Crude oil declines as stocks drop before jobless report
LONDON -- Crude oil dropped, tracking global equity markets, before a report forecast to show the jobless rate in America climbed to a 26-year high in September.
Oil snapped two days of increases as European and Asian stocks fell and U.S. index futures retreated. The U.S. jobless rate probably rose as employers kept cutting staff, according to a Bloomberg News economist survey, 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,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “Equity markets are declining and the crude market is declining as well.”
Crude oil for November delivery dropped as much as US$1.20, or 1.7 percent, to US$69.62 a barrel in electronic trading on the New York Mercantile Exchange, and was at US$69.70 at 11:54 a.m. London time. Prices are set to rise 5.8 percent this week.
U.S. unemployment likely climbed to 9.8 percent, the highest since 1983, from 9.7 percent in August, according to the median estimate of 81 economists surveyed by Bloomberg News. The Labor Department's report is due at 8:30 a.m. in Washington.
“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.
Stock markets around the world dropped ahead of the U.S. unemployment report, pulling crude lower. The MSCI World Index of 23 developed countries slid 0.8 percent at 10:16 a.m. in London, extending its second straight weekly decline. Futures on the Standard & Poor's 500 Index slipped 0.1 percent.
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.
