Oil capped the first weekly loss since early November as the dollar rose against the euro after the U.S. jobless rate fell and Germany cut its growth forecast.
Futures slid 0.4 percent as unemployment dropped to the lowest level since 2008 and the Bundesbank sliced more than 1 percentage point off its 2013 forecast. The dollar climbed to a two-week high. Saudi Arabia is content with current prices, Oil Minister Ali al-Naimi said five days before an OPEC meeting.
“The stronger dollar is negative for commodities,” said Tom Pawlicki, director of market research at Chicago-based commodities trading firm EOXLive. “There is just some worry about global demand for oil.”
Crude for January delivery decreased 33 cents to settle at $85.93 a barrel on the New York Mercantile Exchange. Prices dropped 3.4 percent this week and are down 13 percent this year.
Brent for January settlement slipped 1 cent to end the session at $107.02 a barrel on the London-based ICE Futures Europe exchange.
The dollar advanced as much as 0.7 percent to $1.2877 per euro, the highest level since Nov. 23. A stronger dollar and weaker common currency reduce oil’s appeal as an investment alternative.
“The dollar is adding pressure to oil,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
The jobless rate fell to 7.7 percent in November, the Labor Department reported. It was forecast to stay at 7.9 percent amid concern that Hurricane Sandy hindered growth, according to economists surveyed by Bloomberg. The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6 percent, from the prior month’s 63.8 percent.
“Today’s employment report was significantly better than consensus expectations,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant, in e-mailed comments. “There were some negatives in the report, however, including a drop in the labor force participation rate.”
Employment in the U.S., the world’s biggest oil-consuming country, climbed by 146,000, compared with a 85,000 median estimate of economists surveyed by Bloomberg. That followed a revised 138,000 gain in October that was less than initially forecast.
“It’s a good report but there was continued fall in participation rates and the previous numbers were revised lower,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston.
The euro also fell after the Bundesbank cut its 2013 projection for the German economy, Europe’s largest, to 0.4 percent from 1.6 percent predicted in June.
The European Central Bank reduced its euro-area growth forecasts yesterday. A majority of ECB policy makers were open to cutting the benchmark rate and there is a possibility of a reduction early next year if the economy doesn’t pick up, three officials with knowledge of the Governing Council’s deliberations said.
The global oil market is well supplied, al-Naimi said in an interview in Doha, where he attended an international conference on climate change. Saudi Arabia is OPEC’s largest producer.
“The prices are fine and customers are happy,” he said.
The Organization of Petroleum Exporting Countries will probably leave its group production quota unchanged when ministers meet Dec. 12 in Vienna, according to a Bloomberg survey of 18 analysts.
Crude prices may decline next week on concern that weaker economic growth will reduce fuel demand and boost inventories, a separate Bloomberg survey showed.
U.S. gasoline inventories gained the most in 11 years last week as consumption of the fuel slid, the Energy Department said on Dec. 5.
“Petroleum demand is still weak,” Cooper said.
Oil consumption in China, the world’s second-largest crude user after the U.S., may expand 3.4 percent next year amid an economic recovery, refinery expansions and additions to strategic reserves, according to Deutsche Bank AG.
Electronic trading volume on the Nymex was 427,220 contracts as of 4:54 p.m. Volume totaled 526,874 contracts yesterday, 0.5 percent higher than the three-month average. Open interest was 1.56 million.
To contact the editor responsible for this story: Bill Banker at firstname.lastname@example.org