Oil prices drop on profit taking, despite strong US data

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LONDON – World oil prices continued to slide on Friday, despite upbeat non-farm payrolls data in the United States, as the market was dogged by worries over weak global demand, dealers said.

Brent North Sea crude for delivery in November retreated 78 cents to $111.80 a barrel in late afternoon trade in London.

New York’s main contract, West Texas Intermediate (WTI) or light sweet crude for November, dipped $1.40 to $90.31 a barrel.

The market fell as many traders cashed in some of their bumper gains from the previous day, while the upbeat payrolls report in the United States — the world’s largest oil consumer — failed to dispel energy demand concerns.

“Despite the strong rise in equity markets and the weakness of the dollar, oil prices have drifted back from yesterday’s highs,” said CMC Markets analyst Michael Hewson.

“Growth concerns remain the major concern and one average US jobs report cannot change the fact that demand looks weak.”

Huge revisions to previous months’ data released Friday gave a sharply better picture of the US jobs situation, helping push the unemployment rate down to 7.8 percent.

The Labor Department’s fresh numbers for September showed only 114,000 jobs were generated last month, but revisions to July and August data showing many more jobs were produced and fewer people dropped out of the workforce helped cut the overall rate from the previous 8.1 percent.

Oil had spiked higher on Thursday, with WTI soaring more than $4 on mounting worries over clashes on the Syria-Turkey border, the weaker dollar and a fire at a US refinery, analysts said.

“The WTI crude prices rallied sharply yesterday, effectively recouping the losses posted the day before, largely on the back of a border conflict between Turkey and Syria,” said Capital Spreads analyst Simon Denham.

“Furthermore, a fire reported at one of Exxon Mobile’s refinery exacerbated the rise.”

Oil also rallied as traders cheered US data showing better-than-expected private sector hiring and a pick-up in the service industry.

“Oil prices (in London) have been trading within a tight band over the past five days, bouncing between $108 and $113,” said analyst Gary Hornby at British-based consultancy Inenco.

“Ongoing Middle Eastern tensions and the bearish economic outlook have been the two main drivers, however prices jumped $4 higher … as a fire at one of the largest oil refineries in the US saw US gasoline prices rise.

“Furthermore, oil supply remains tight with the continuing loss of oil from Iran, where the US sanctions have caused the Iranian currency to lose 17 percent of its value in one day, and could be the first sign that the financial sanctions against the country could be working.”

Meanwhile, worries grew over the flagging Chinese economy, which is the biggest global consumer of energy.

Data showed Thursday that activity in China’s non-manufacturing sectors hit a near two-year low last month, adding to concerns over a slowdown in the world’s second-largest economy.

The official non-manufacturing Purchasing Managers’ Index (PMI) Index released Wednesday fell from 56.3 in August to 53.7 in September — its lowest point since November 2010.

A reading above 50 indicates expansion, while anything below points to contraction. The previous low was 53.2, official statistics show.

The figure comes after China said Monday that activity in the vital manufacturing sector came in at 49.8 in September, a slight increase from August but still showing shrinkage.

China’s economic growth slowed to 7.6 percent in the three months through June from the same period the year before, the weakest in three years.

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  • earlrichards

    If worldwide oil prices are dropping, then, why are not the gasoline and oil prices dropping in the Philippines?

  • http://jaoromero.com/ Jao Romero

    o eh bat walang rollback? samantalang pag tumaas ang oil price sa world market, walang pang 24 hrs taas presyo na ang mga 0gag na yan. samantalang pag bumababa ang presyo sa pandaigdigang merkado, abutin ng isang linggo bago mag-deklara ng rollback ang mga hinayupak na yan. ano to, lokohan?

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