Crude oil was little changed below $70 a barrel in New York after falling on concern oil demand in the U.S., the biggest energy-consuming nation, will be slow to rebound as the jobless rate increased.
Oil prices dropped Oct. 2 by as much as 3.5 percent after a Labor Department report showed the U.S. lost more jobs than estimated in September. Economist Nouriel Roubini, the New York University professor who predicted the financial crisis, said Oct. 3 equity and commodity markets may decline in coming months as the gradual pace of the economic recovery disappoints investors.
“We continue to expect this volatility in the data to persist until the oil market emerges from the shoulder-month period and the economic recovery gains more solid footing,” analysts at Goldman Sachs Group Inc., led by Allison Nathan, said in a report today.
Crude oil for November delivery was at $69.81 a barrel, down 14 cents, in electronic trading on the New York Mercantile Exchange, at 12:02 p.m. Singapore time. The contract earlier fell as much as 67 cents, or 1 percent, to $69.28 a barrel. Futures have gained 56 percent this year.
Oil lost 1.2 percent Oct. 2, the biggest decline since Sept. 24, to settle at $69.95 a barrel. U.S. unemployment climbed to 9.8 percent, the highest since 1983, from 9.7 percent in August, according to the Labor Department.
“There was weak data coming out of the U.S. and equity markets were weaker,” said Mark Pervan, senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “It’s all pointing downward.”
‘Easy Money’
Governments around the world have poured $2 trillion in stimulus while central banks have cut interest rates to close to zero in efforts to revive growth. This “easy money” has created asset bubbles, causing markets to rise too quickly, Roubini said in an interview in Istanbul.
Asian shares extended last week’s losses, with the MSCI Asia Pacific Index pulling back 0.4 percent to 114.03 as of 12:29 p.m. in Tokyo. On Oct. 3, the Standard & Poor’s 500 Index retreated 1.8 percent to close at 1,025.21, posting its first two-week drop since July. The Dow Jones Industrial Average was down 1.8 percent at 9,487.67.
“The equity markets are starting to realize that things may have run too hard, too quickly,” Pervan said.
Brent crude oil for November settlement traded at $67.96 a barrel, down 11 cents, on the London-based ICE Futures Europe exchange, at 11:33 a.m. in Singapore. The contract lost 1.6 percent to settle at $68.07 a barrel on Oct. 2, the biggest decline since Sept. 24.
“Economic and oil data remained consistent with a macro economy just beginning to push off the trough, leaving markets with a lack of clear direction,” Goldman’s Nathan said.
Surpassing Saudis
Russia surpassed Saudi Arabia as the world’s largest oil producer last month. Russia increased its output 1.7 percent to a post-Soviet high in September from a year earlier, after OAO Rosneft starting pumping from a new field in August. Production rose to 10.01 million barrels a day from 9.84 million barrels, the Energy Ministry’s CDU-TEK unit said Oct. 2.
“Russia again saw record production levels, so that’ll hang on the market,” Pervan said.
Saudi Arabia was the world’s largest oil producer in 2008, according to U.S. Energy Department data and estimates from Bloomberg News.
The kingdom pumped 8.015 million barrels a day last month, based on a Bloomberg survey. It has cut output by 17 percent from 9.6 million barrels a day in July 2008 as part of an effort by the Organization of Petroleum Exporting Countries to support prices by curtailing shipments.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
