World Business

Oil slips as US jobless data, inventories weigh

(Agencies)
Updated: 2010-04-09 16:16

NEW YORK: Oil prices fell on Thursday for the second day in a row as a rise in US jobless claims and high crude inventories outweighed upbeat retail sales data in the world's top energy consumer.

US crude settled down 49 cents at $85.39 a barrel, after falling to $84.38 early. In London, Brent crude ended down 78 cents at $84.81 a barrel, well above its early low of $84.20.

"Crude oil continued the retreat from the recent highs, aided by a surprise from the Department of Labor that revealed an unexpected gain in jobless claims," said Mike Fitzpatrick, vice president-energy at MF Global in New York.

The number of US workers seeking jobless aid unexpectedly shot up last week. However, that did not alter the view that labor markets are recovering as the increase reflected Easter holiday volatility.

Brimming US crude inventories reported by the US Energy Information Administration on Wednesday continued to fuel bearish sentiment. This kept oil prices lower after data showing strong US chain store sales caused crude futures to retrace earlier losses.

A report that US comparable chain store sales rose 9 percent in March lifted Wall Street, eclipsing the equity market's worries about Greece's debt problems.

The euro rose against the dollar, rebounding after falling to near its lowest level this year, as European Central Bank President Jean-Claude Trichet said Greece was not in danger of defaulting on its debt.

But against a basket of major currencies the greenback was up 0.10 percent in late trading.

A stronger dollar makes dollar-denominated commodities, such as oil, more expensive for holders of other currencies and can indicate that investors are moving money away from assets deemed riskier. Conversely, a weaker dollar makes commodities such as oil attractive to investors seeking safer havens.

Oil prices in New York had rallied to an 18-month intraday peak above $87 on Tuesday after a flurry of positive US economic indicators. They had climbed almost 9 percent in six sessions, before changing direction on Wednesday.

US crude inventories rose last week to their highest level in nearly 10 months as imports surged, the latest US government data showed on Wednesday.

"Fundamentals have been getting progressively more bearish with each week's EIA report," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

Weekly data from Genscape provided to Reuters showed crude oil stocks at the key delivery point for the US crude oil futures contract in Cushing, Oklahoma, rose by 1.7 million barrels in the week to April 6 to 33.8 million barrels.

EIA data on Wednesday showed stocks there rose by 300,000 barrels to 31.2 million barrels in the week to April 2.

Some analysts said the dip in prices may be short-lived as the United States gears up for the summer driving season that begins in late May and ends in early September, when gasoline demand peaks.

"We wouldn't be surprised to be close to $100 this summer," said Peter McGuire, managing director of Commodity Warrants Australia in Sydney.

On the geopolitical front, the United States said on Thursday it hoped to agree on new punitive measures against Iran over its nuclear program within weeks, as six world powers prepare to meet in New York to draft a sanctions resolution.

Iran's wrangling with the West over its nuclear program, which it insists is for peaceful purposes and not aimed at producing atomic weapons, has been closely watched in the oil markets for its supply risk implications.