World oil prices fell on Friday (Jun 3) after a dismal US jobs report added to worries about weak global economic growth and slow growth in crude demand.
Also adding to the downward pressure was the first rise in months in the number of oil drilling rigs deployed in the United States, suggesting that the recent rebound in crude prices could lead to higher US output.
US benchmark West Texas Intermediate for delivery in July finished down 55 cents at US$48.62 a barrel. The London Brent contract for August delivery fell 40 cents to close at US$49.64.
Prices held steady in early trade despite the failure of OPEC to take action to shore up prices in its semi-annual meeting in Vienna on Thursday.
But a surprisingly poor US employment report for May, with the number of monthly jobs added only one-quarter of what was expected, took the wind out of the crude trade.
A drop in the dollar of more than 1.7 per cent against the euro and 2.0 per cent on the yen failed to shore up buying as well.
Also weighing, said Tim Evans at Citi Futures, was the lifting of the force majeure declaration on ExxonMobil exports in OPEC member Nigeria, which “may hint at a recovery in overall Nigerian supplies,” he said.
“A rebound to a more typical 2.0 million barrels a day in production would likely push OPEC total output to 33.0 million barrels a day or more, delaying the rebalancing of the global market,” he added.
Meanwhile the Baker Hughes weekly North American rig count, which helps measure exploration and production activity, rose for the first time in months after hitting a multi-decade low.
It showed an increase of nine onshore oil drilling rigs in the United States, a possible reaction to the lure of higher crude prices.
A steady fall in US oil production, by more than 800,000 barrels a day since one year ago, has paralleled the sharp pullback of drilling rigs active in the US oil field.
Courtesy : channelnewsasia.com
