WTI Oil Heading for Weekly Drop Before U.S. Payroll Data
West Texas Intermediate crude traded near a two-week low, headed for its biggest weekly drop since September, before U.S. March payroll data later today.
WTI futures in New York are poised for a 4.5 percent loss from the March 28 close, the most since the week ended Sept. 21. World powers and Iran started two-day talks in Kazakhstan on Iran’s nuclear program. U.S. monthly jobs data will be released at 8:30 a.m. New York time today. Declines in London’s Brent crude may be “overdone,” according to Goldman Sachs Group Inc.
“Selling is coming in ahead of the U.S. data, as we are having risk aversion,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
WTI for May delivery was at $92.89 a barrel in electronic trading on the New York Mercantile Exchange, down 37 cents, at 12:27 p.m. London time. It fell 1.3 percent to $93.26 yesterday, the lowest settlement since March 21.
Brent for May settlement on the London-based ICE Futures Europe exchange was at $105.80 a barrel, down 54 cents. It slipped 0.7 percent to $106.34 yesterday, the lowest close since Nov. 2. The futures have fallen 11 percent from this year’s intraday peak of $119.17 on Feb. 8.
“The market has been a bit negative about payroll figures coming later today, and the surprise could be more on the upside,” said Thina Saltvedt, an analyst at Nordea Bank AG in Oslo.
The European benchmark grade was at a $12.91 premium to WTI, versus $13.08 yesterday. The spread shrank to $12.66 on April 3, the narrowest since July.
Brent may recover from the recent sell-off as global inventories will remain low and economic growth picks up in the second half of the year, Goldman Sachs said in an April 4 report. The bank maintained its second-quarter price projection at $110 a barrel.
U.S. jobless claims rose by 28,000 in the week to March 30 to 385,000, the Labor Department said yesterday. The median economist estimate was 353,000, according to a Bloomberg News survey. The country may have added 190,000 new jobs in March, according to a separate survey before payroll data to be released today. That would be down from 236,000 in February.
The volume of WTI contracts traded was 14 percent below the 100-day average while Brent was 27 percent above.
International negotiators from the U.S., Britain, France, Germany, Russia and China are holding nuclear-program talks with Iran today in Almaty, Kazakhstan. Early last year, tensions with Iran contributed to higher oil prices and a European Union embargo that started in July has curbed the country’s ability to export crude.
EU foreign policy chief Catherine Ashton said in a statement the group was looking for “a considered, balanced and well thought-out response” from Iran on its nuclear program.
Crude will probably fall next week on signs economic growth is slowing, a Bloomberg survey showed. Fourteen of 26 analysts and traders, or 54 percent, forecast WTI will drop through April 12. Eight respondents, or 31 percent, predicted a gain and four said there will be little change. Last week, 50 percent of survey respondents projected a decrease.
Several North Sea oil-loading programs are being released to traders today, detailing the likely supply for next month. The Brent and Oseberg programs show an increase while exports of the Ekofisk grade will fall, they show. A potential strike may close some Norwegian platforms on April 8.
U.S. crude stockpiles climbed by 2.71 million barrels last week to 388.6 million, the highest since 1990, the Energy Information Administration, the Energy Department’s statistics unit, reported on April 3. That’s more than a 2.1 million median increase predicted by analysts in a Bloomberg survey.
Oil demand will be “less than it was before” in the next few months, Maria van der Hoeven, the executive director of the International Energy Agency, said yesterday in a Bloomberg Television interview. “That will help, we hope, to loosen the tightness of the market.”
The IEA’s next monthly market report will be published on April 11.
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