Oil rebounded from the lowest close in almost three weeks in New York before a report that may show hiring in the U.S. increased.
Futures rose as much as 0.9 percent, trimming a second weekly decline. Employers probably added 100,000 workers in July after an 80,000 gain in June, according to a Bloomberg News survey ahead of government data today. Tropical Storm Ernesto may develop into a Category 1 hurricane by Aug. 6, the U.S. National Hurricane Center said. Oil fell 2 percent yesterday after the European Central Bank failed to assure investors it was ready to take immediate steps to support the economy.
“The jobs report will be critical, and if it’s way under predictions, it’s going to be a clear trend that the U.S. jobs market is slowing,” said Anthony Nunan, a senior adviser for risk management at Mitsubishi Corp. in Tokyo. New York oil “is in congestion, in a sideways trading range,” he said.
Oil for September delivery increased as much as 81 cents to $87.94 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.89 at 3:07 p.m. Singapore time. The contract yesterday fell $1.78 to $87.13, the lowest close since July 13. Prices are 2.5 percent lower this week and down 11 percent this year.
Brent crude for September settlement gained 87 cents, or 0.8 percent, to $106.77 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark’s premium to West Texas Intermediate was at $18.87. It closed yesterday at $18.77, the widest gap since May 16.
“The spread reflects strength in the Brent market, not the weakness in WTI. Brent is being supported by geopolitical factors and also the fact that worldwide refinery runs should increase as we go through the fourth quarter,” Nunan said. “I expect the Brent-WTI spread to remain wide.”
Crude shipments from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, have plunged by 1.2 million barrels a day, or 52 percent, since the latest sanctions aimed at dissuading the country’s nuclear program began July 1, according to data compiled by Bloomberg.
Catherine Ashton, the European Union foreign-policy chief, spoke with Iran’s top nuclear negotiator and failed to set a specific date for the next round of talks aimed at pressuring the country to give up elements of its nuclear program. The two officials agreed to talk again “after further reflection at the end of the month,” according to an e-mailed statement yesterday from Ashton’s office.
Oil in New York has technical resistance around $90 a barrel, along a downward-sloping trend line on the daily chart going back three months, according to data compiled by Bloomberg. Price advances the past two weeks have stalled near this line. Sell orders tend to be clustered near chart-resistance levels.
“Near term, market attention will next shift to the last of the week’s event risks, namely U.S. non-farm payrolls,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today.
Ernesto, the fifth named weather system of the Atlantic season, developed east of the Lesser Antilles, prompting storm warnings for islands including Barbados, St. Lucia, Martinique and Guadeloupe. Top winds remained at 50 miles, according to a hurricane center advisory today. It’s about 35 miles north-northwest of Barbados and moving west at 23 mph.
It’s too early to say if the storm’s track will lead it into the Gulf of Mexico. The Gulf is home to 6.5 percent of U.S. natural gas output, 29 percent of oil production and 40 percent of refining capacity, according to the Energy Department. In June, Tropical Storm Debby’s threat to the Gulf pushed New York natural gas futures to a one-month high as about 35 percent of the region’s output was shut.
Analysts and traders surveyed by Bloomberg News were split over the direction of oil prices next week after central banks failed to bolster stimulus and Tropical Storm Ernesto developed. Thirteen of 33 forecasters, or 39 percent, estimated crude will drop through Aug. 10. Another 13 respondents predicted that futures will increase and seven said there will be little change.