News // Markets & Stocks
Oil Hovers Near $82 Ahead of US Payrolls Data
06 August 2010 , 13:00CNBC News1894
Crude oil prices held steady on Friday near $82 before a report expected to show U.S. employment declined for a second straight month in July, as investors watch for clues to the pace of economic and energy demand recovery.
Oil prices are now squeezed between the influence of equities and the dollar, analysts said.
Negative economic news is sending stock markets and the dollar tumbling, but the return of crude's inverse correlation with the U.S. currency is supporting the oil market, which has recently failed to track stock markets lower.
"Once fear subsides and people are a bit more confident about the economic outlook, the weaker macro data doesn't seem to have such a big impact on prices," said Ben Westmore, a commodities analyst at National Australia Bank in Melbourne.
U.S. nonfarm payrolls probably fell by 65,000 in July, a Reuters survey showed ahead of Friday's monthly report. The number of Americans making new claims for jobless benefits jumped in the week ended July 31 to the highest level in nearly four months, weekly data showed on Thursday.
U.S. light, sweet crude [US@CL.1 82.08 0.07 (+0.09%) ]added 3 cents to $82.04 a barrel in the Asian session, while London Brent crude [GB@IB.1 81.46 -0.15 (-0.18%) ]shed 7 cents to $81.54.
Front-month U.S. crude was on track for its biggest weekly gain in four weeks, up by almost four percent, after topping $80 a barrel for the first time in three months on Monday and taking prices out of a persistent $10-wide trading range where they have hovered for almost two months.
Japan's Nikkei average fell as much as 1 percent on Friday, while the dollar was on the defensive near a 3 1/2-month low against a basket of currencies.
A stronger dollar renders oil imports more expensive for Asian consumers including Asia-Pacific's top five -- China, Japan, India, South Korea and Indonesia -- which combined use about the same amount of oil as the United States.
U.S. fuel inventories have risen for most of the northern hemisphere summer, when gasoline demand peaks and inventories of the fuel usually fall.
The U.S. Energy Information Administration on Wednesday said the country's gasoline stocks rose for an unexpected sixth consecutive week, while supplies of distillate fuel including diesel climbed for a tenth.
"The fundamentals at some point have to reassert themselves," Westmore said. "We had a pretty weak EIA report. Product stocks are building and the market didn't react much."
BP [BP 40.68 1.29 (+3.27%) ]finished pumping cement into its ruptured oil well in the Gulf of Mexico on Thursday to seal off the source of the world's worst offshore spill, paving the way to permanently plug the blow-out later this month.
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