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Oil prices drop after disappointing jobs report
Source: Agencies |
January 8, 2011, Saturday
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OIL prices fell to about US$88 per barrel yesterday after the government reported that the US economy continues to add jobs, although not at the pace many experts hoped for.
Benchmark crude for February delivery fell 30 cents to settle at US$88.03 a barrel on the New York Mercantile Exchange. Prices ended the week at the lowest level since Dec. 17.
The economy gained 103,000 jobs in December and figures for October and November were revised upward. More jobs means more cars will join the morning commute, and that usually boosts gasoline consumption in the US But drivers are expected to stay closer to home this month as severe winter weather sweeps across the US
Oil had been rising, increasing 22 percent from Labor Day through the end of the year. It hit a two-year high on the first trading day of 2011 before dropping in the second half of the week.
Traders have grown cautious in January. For more than a year, oil stayed in a relatively stable range of about US$70 to US$80 per barrel. It appears that even bullish forecasts from investment banks couldn't keep them buying at above US$90 per barrel.
"All this happened so fast, just a few weeks," said Tom Kloza, chief analyst at the Oil Price Information Service. "They hit a speed bump."
Analyst Peter Beutel blamed the price drop on concerns about growing supplies and the rise of the dollar against other major currencies. Oil is priced in dollars, and becomes more expensive for investors holding foreign currency as the dollar gets stronger.
Despite the recent drop in oil prices, many experts think the price of a barrel will pass US$100 this year, pushing up gasoline prices as the spring driving season approaches.
In other Nymex trading for February contracts, heating oil fell 2.49 cents to settle at US$2.4863 per gallon, and gasoline dropped 2.99 cents to settle at US$2.4131 per gallon. Natural gas gave up 1.2 cents to settle at US$4.422 per 1,000 cubic feet.
In London, Brent crude lost US$1.19 to settle at US$93.33 a barrel.
Benchmark crude for February delivery fell 30 cents to settle at US$88.03 a barrel on the New York Mercantile Exchange. Prices ended the week at the lowest level since Dec. 17.
The economy gained 103,000 jobs in December and figures for October and November were revised upward. More jobs means more cars will join the morning commute, and that usually boosts gasoline consumption in the US But drivers are expected to stay closer to home this month as severe winter weather sweeps across the US
Oil had been rising, increasing 22 percent from Labor Day through the end of the year. It hit a two-year high on the first trading day of 2011 before dropping in the second half of the week.
Traders have grown cautious in January. For more than a year, oil stayed in a relatively stable range of about US$70 to US$80 per barrel. It appears that even bullish forecasts from investment banks couldn't keep them buying at above US$90 per barrel.
"All this happened so fast, just a few weeks," said Tom Kloza, chief analyst at the Oil Price Information Service. "They hit a speed bump."
Analyst Peter Beutel blamed the price drop on concerns about growing supplies and the rise of the dollar against other major currencies. Oil is priced in dollars, and becomes more expensive for investors holding foreign currency as the dollar gets stronger.
Despite the recent drop in oil prices, many experts think the price of a barrel will pass US$100 this year, pushing up gasoline prices as the spring driving season approaches.
In other Nymex trading for February contracts, heating oil fell 2.49 cents to settle at US$2.4863 per gallon, and gasoline dropped 2.99 cents to settle at US$2.4131 per gallon. Natural gas gave up 1.2 cents to settle at US$4.422 per 1,000 cubic feet.
In London, Brent crude lost US$1.19 to settle at US$93.33 a barrel.
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