U.S.
Jobs Data Propels Crude Oil Above $80 a Barrel
Oil Market Summary for 03/01/2010 to 03/05/2010
Jobs data indicating that
U.S.
economic recovery might be picking up steam finally pushed crude oil futures
decisively over the stubborn $80 a barrel threshold. Nymex’s benchmark West
Texas Intermediate settled Friday at $81.50 a barrel, a seven-week high, after
topping $82 in intraday trading.
An unchanged unemployment rate of 9.7% and a
smaller-than-expected drop in payrolls propelled both stocks and commodities
higher on Friday. Earlier in the week, industry job data also came out better
than expected, pushing crude just above the $80 a barrel mark.
Any improvement in the labor market would translate into
more commuter driving, more vacation driving this summer and generally greater
energy demand, analysts said.
The jobs figures trumped other data, such as increases in
inventories, that normally dampen oil prices. Oil
inventories rose by 4 million barrels in the week, well ahead of consensus
forecasts for a gain of only 1 million barrels.
Remarks by Chinese Premier Wen Jiabao at the opening of the
National People's Congress on Friday expressing continued support for the
economy also pushed prices higher, analysts said. Wen said the economy was on
track to grow 8% this year. Recent efforts by Chinese authorities to curb bank
lending have led to uncertainty about Chinese growth prospects.
But the situation in Europe with
Greece’s
fiscal crisis weighing on the euro continued to unsettle markets.
Greece
successfully placed a bond issue this week, but questions remain about the
stability of the euro zone. The euro inched above the $1.36 mark in late Friday
trading.
Oil Prices also overcame a nearly 4% drop
in natural gas prices on Thursday. The benchmark Nymex contract fell 18.2 cents
on Thursday to settle at $4.575 a million British thermal units. Traders
concluded that cold winter weather was now over, analysts said.
The draw-down in gas storage was only 116 billion cubic feet
in previous week, less than the consensus forecast, so that total gas storage
remains above the five-year average. Natural gas futures settled only
marginally higher on Friday at $4.595/MMBtu.
Natural gas price trends are more often decoupled from crude
oil trends as increased output of shale gas in the
U.S.
creates a different supply and demand situation.
The Commodity Futures Trading Commission has begun flexing
some enforcement muscle in energy futures trading. The CFTC fined UBS for
exceeding position limits in heating oil and natural gas contracts, and the
U.S. Oil Fund, an exchange-traded fund, said the agency may charge it with
wrongly reporting some trades.
But the UBS fine was quite small, only $130,000, and the
fault in the USO reporting may lie with the broker or clearing house. Even so,
commentators said these may be early signs that the CFTC will be following
through on its pledge to police futures trading more carefully.
-----------------------
Darrell Delamaide writes for OilPrice.com and focuses on Fossil
Fuels, Alternative Energy, Metals, Crude Oil Price and Geopolitics. To find out
more visit their website at: http://www.oilprice.com.
