Crude oil fell for the sixth time in seven days as unemployment claims unexpectedly jumped to a two-month high and industrial production improved less than anticipated, signs energy demand may be slow to recover.
Oil fell as much as 0.7 per cent as the Labor Department said initial jobless claims rose 24,000 to 484,000 in the week ended April 10. Warmer weather caused utility use to drop the most in four years, limiting the rise in March industrial production to 0.1 per cent, according to the Federal Reserve.
``Industrial production was not as high as we thought it was going to be, and, for the jobless claims, we were looking for a little bit less,'' said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. ``People are taking a little breath after yesterday and the record volume of the past few days.''
Crude oil for May delivery fell 31 cents, or 0.4 per cent, to $US85.53 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil has climbed 74 per cent in the past year. Prices surged 2.1 per cent, the most since March 29, in yesterday's trading.
Volume in electronic trading on the Nymex was 711,558 contracts at 2:31 p.m. in New York. Volume has topped 1 million contracts for the past four sessions. It was 1.15 million contracts yesterday, down from a record 1.42 million contracts on April 13. Open interest was 1.39 million contracts.
US gasoline demand slipped to an eight-week low last week as motorists reduced their driving after the three-day Easter weekend, MasterCard Inc. said April 13. Motorists bought an average 9.3 million barrels a day of gasoline in the week ended April 9, 3.6 per cent below the prior week, the second-biggest credit card company said in its SpendingPulse report.
US industrial production was forecast to rise 0.7 per cent last month.
Overall US manufacturing accelerated in March as factories spearheaded the recovery from the worst recession since the 1930s. Factory production climbed 0.9 per cent after rising 0.2 per cent in February, the Fed reported. Regional data indicated the gains extended into this month.
``There was a real mixed bag between the unemployment, the jobless claims, and the industrial production number not as good as expected and the manufacturing indexes which were really good,'' said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. ``The main things driving the market right now are macroeconomic expectations.''
Oil also fell as the dollar snapped a five-day losing streak against the euro, dampening the investment appeal of commodities, and as US oil supplies fell for the first time in 11 weeks in a government report yesterday.
The dollar advanced 0.6 per cent against the euro to $US1.3567 from $US1.3653 yesterday in New York.
US crude-oil inventories dropped 2.2 million barrels, or 0.6 per cent, last week to 354 million barrels, the Energy Department reported yesterday. It was the first decline since the week ended Jan. 22. Supplies were 5.1 per cent above the five-year average, down from 7.1 per cent the week before.
``You've got the dollar pretty strong, yet oil prices are not getting clobbered, which is not something we would have seen three or four months ago,'' said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. ``The market's sitting on top of what looks like very impressive data coming out of China,''
China, the second-largest oil user, expanded by 11.9 per cent in the first quarter. The growth in the gross domestic product was higher than the median 11.7 per cent estimate in a Bloomberg News survey of 24 economists. The US is the largest energy-consuming country.
Chinese refiners processed 34.56 million metric tons of crude in March, 18 per cent more than the same month last year, according to China Mainland Marketing Research Co., which compiles data for the government. That's the highest level after volume reached 34.6 million tons in December.
Brent crude oil for May, which expires today, rose $US1.02, or 1.2 per cent, to $US87.17 a barrel on the London-based ICE Futures Europe exchange. Earlier, it touched $US87.58, the highest level since October 2008. The more actively traded June contract gained 65 cents, or 0.8 per cent, to $US87.55 a barrel.
The Organization of Petroleum Exporting Countries will increase oil shipments by about 0.9 per cent in the four weeks to May 1, according to tanker-tracker Oil Movements.
OPEC, which supplies about 40 per cent of the world's crude, will ship 23.4 million barrels a day, compared with 23.2 million barrels in the four weeks to April 3, the Halifax, England-based consultant said today in a report. The data excludes Ecuador and Angola.
OPEC said yesterday its compliance with record supply cuts agreed to in late 2008 slipped to 53 per cent last month from a revised 55 per cent in February. Compliance was at 53 per cent last month, based on Bloomberg estimates.
Source: Bloomberg News