Oil falls as tepid US jobs growth disappoints

Brent crude prices fell sharply on F riday after a report showing tepid US jobs growth in June reinforced concerns that a sluggish global economy will curb demand for petroleum. US crude fell more than 3 per cent and posted a 51-cent weekly loss, while an oil-workers strike in Norway and rising tensions over Iran’s disputed nuclear programme allowed Brent crude prices to record a 39-cent weekly gain, based on settlement. Norway’s oil industry and labour unions were to restart negotiations yesterday at the request of the government. Crude futures briefly pared losses on the news that the government chose not to intervene, hoping the parties can resolve the dispute themselves. Some analysts had expected Oslo to act quickly to return striking workers to their jobs after industry’s threat of a lockout. US employers added only 80,000 jobs in June, 10,000 fewer than analysts expected, and the unemployment rate remained at 8.2 per cent, fuelling fears Europe’s debt crisis was shifting the US economy into a lower gear. “People were looking for something better, some indicator that may show we’re crawling out of this trough,” said Nigel Gault, chief US economist at IHS Global Insight. “But everything here says we’re still in it.” Brent August crude fell $2.51 to settle at $98.19 a barrel, with the $97.73 low recorded in post-settlement trading. US August crude slumped $2.77 to settle at $84.45 a barrel, down 0.6 per cent for the week and falling as low as $84.02 in post-settlement trading. Brent’s premium to US crude {CL-LCO1=R} increased to $13.73 a barrel, based on settlement prices, as the Norway oil workers strike and the potential threat to supply from Middle East tensions provide more support to Brent. Thin volumes characterised trading for both Brent and US crude, with total volumes for both contracts below 30-day averages. US refined products futures slipped in tandem with crude oil, with heating oil losing more than 5 cents and RBOB gasoline dropping nearly 5 cents. The Commitments of Traders reports from the US Commodities Futures Trading Commission has been delayed until tomorrow at 3:30 p.m. EDT (1930 GMT) due to this week’s US Independence Day holiday. Commodities tumbled on Friday by their most this year, eroding their second successive weekly gain after dismal US jobs data fueled worries about the global economy and raw materials demand. The Thomson Reuters-Jefferies CRB index .CRB fell 2.2 per cent to 286.92, the biggest one-day decline since December, knocking down the weekly gain to just under 1 per cent. The loss curbed one of the biggest, broad-based commodities rallies on record; from June 29 until Thursday, the CRB was up nearly 8 per cent. Monetary easing by central banks in China, the euro zone and Britain on Thursday had underscored concerns about a fragile global economy that has muddied the demand outlook for commodities. “The latest jobs data also underscores the weakness that has emerged in the global economy,” said Gene McGillian of Tradition Energy, Stamford, Connecticut. “With the economies of China and Europe also weakening, this spells lower global demand for energy.” The disappointing jobs report kept intact hopes that the US Federal Reserve will move to bolster a sputtering economy. Adding to the bearish tone, the head of the International Monetary Fund voiced concern over the deterioration of the global economy, saying the IMF will downgrade some of its forecasts. Additional pressure on dollar-denominated oil prices came from the weak dollar. The euro slumped to a two-year low against the dollar as the US jobs report added to concerns that Europe’s debt crisis is weighing on US economic growth and stoked strong risk aversion and a flight to safe havens. The downdraft from the disappointing job additions sent US stocks lower, with the S&P 500 index posting a weekly loss. From gulfnews