Oil prices pull back ahead of U.S. jobs, oil data
London (Mar 4) Oil prices fell in volatile trade on Friday ahead of closely watched reports on U.S. jobs and oil drilling rigs.
Brent crude LCOK6, +0.76% , the global oil benchmark, fell 0.3% to $36.97 a barrel on London’s ICE Futures exchange after trading higher in earlier trade. On the New York Mercantile Exchange, West Texas Intermediate futures CLJ6, +0.52% were trading down 0.1% at $34.54 a barrel.
Economists expect the U.S. employment report to show continued strong expansion in job creation, which could boost the dollar. A rising greenback has adverse effects on dollar-priced commodities like oil. The Wall Street Journal Dollar Index BUXX, -0.10% , which tracks the dollar against a basket of other currencies, rose 0.05% on Friday.
“For today, we continue to expect prices to move back towards the middle of the range as U.S. nonfarm payrolls are expected to be strong,” said Daniel Ang, a Phillip Futures analyst.
Market participants were also awaiting the latest oil rig count to be released later in the day by Baker Hughes Inc. BHI, +2.51% . The number of active rigs drilling for crude in the U.S., viewed as a rough proxy for activity in the oil industry, has fallen sharply since oil prices began to fall.
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There are now about 68% fewer rigs of all kinds from a peak of 1,609 in October 2014. U.S. oil output, however, hasn’t fallen by as much as drillers have increased their efficiency and employed new technologies.
Still, U.S. output posted a 2.6% year-over-year drop in the week that ended Feb. 26 by falling to 9.08 million barrels a day, according to official data. Latest projection by the U.S. Energy Information Administration estimates domestic crude production to decrease from an average of 9.4 million barrels a day in 2015 to 8.7 million barrels a day in 2016 and to 8.5 million barrels a in 2017.
A fall in U.S. has supported prices in recent weeks along with hopes that major producers like Russia and members of the Organization of the Petroleum Organization will curtail their output to support prices.
Read: Why there’s no way OPEC will cut production again
Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, said a meeting will take place on March 20 in Moscow to “fine tune collaborative strategies,” according to a statement from the Nigerian National Petroleum Corp.
Big suppliers like Iran, however, have already indicated that they won’t join the freeze plan. Some analysts are also skeptical of the plan since holding output at the January levels means the global glut may take longer to dwindle because many producers were already pumping at near-record rates.
Read: If oil doesn’t do this, then watch for a steep fall
Nymex reformulated gasoline blendstock for April RBJ6, -0.15% — the benchmark gasoline contract — fell 0.7% to $1.29 a gallon. ICE gasoil changed hands at $333.50 a metric ton, down $1.75 from the previous settlement.
Source: MarketWatch
