NEWS & EVENTS: Breaking News
03.07.2009 08:01
July 3. In global petroleum market headlines, oil prices tumbled to their lowest close in a month Thursday following the release of bleak unemployment numbers in Europe and the US. Benchmark crude for August delivery plunged USD 2.34, more than 3%, to USD 66.97 a barrel on MICEX. Prices dipped as low as USD 66.54 a barrel at one point in the day. In London, Brent prices dropped USD 2.11 to USD 66.68 a barrel on the ICE Futures exchange. In the United States a Labor Department report showed the economy shed a larger-than-expected 467,000 jobs in June, with the unemployment rate rising to 9.5% from 9.4% in May, underscoring concerns about the pace of economic recovery. This is the official rate, which, in our opinion, means that the real jobless rate could be in the range of 15-20%. The consensus forecast had been expecting payroll reductions of 363,000 in June. Since the recession began in December 2007, the economy has lost a net total of 6.5 mn jobs. That has been destructive to energy demand on various levels. People who have lost their jobs or fear losing jobs are driving less and buying fewer goods, many of them petroleum-based. Factories have also curbed production and are using less natural gas and electricity. US stockpiles of natural gas continue to grow as energy demand weakens. The government reported that the nation's surplus grew more than expected last week, and it's now 21% above the five-year average. Yesterday’s US job numbers came hot on the heels of an awful employment picture in Europe. Unemployment in the 16 countries that use the euro spiked to a 10-year high in May. The seasonally adjusted unemployment rate for the Eurozone in May stood at 9.5%, up from April's 9.3%, and hitting its highest level since May 1999. The euro slipped to USD 1.4013 on Thursday from USD 1.4148 late Wednesday in New York, while the British pound was down to USD 1.6347 from USD 1.6474. That, in effect, makes crude more expensive, and pushed even more money out of crude markets to end the shortened week. NYMEX is closed today for the July Fourth holiday which is celebrated today. Moving forward, the latest jobless number have knocked the wind out of the bulls’ sails, and we could see some more serious retracement to the downside unless some positive drivers come along soon. Given the current high volatility in the market, all we can say now is that in the near term crude will trade somewhere in a wide range of USD 60-70, with pressure clearly on the downside if more news come out in support of yesterday’s dismal data.
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