Thursday, September 2, 2010

Crude Oil Futures Fall as U.S. Jobs Report Signals Slowing Economic Recovery

Crude oil fell as initial U.S. jobless claims bolstered concern that the country’s economy will be slow to recover, crimping fuel demand. Oil slipped as much as 1.1 percent as a report showed that the number of Americans seeking unemployment benefits decreased by 6,000 to 472,000 in the week ended Aug. 28. U.S. crude oil stockpiles climbed 3.43 million barrels to 361.7 million last week, an Energy Department report showed yesterday.

“Although jobless claims dropped a little, they are still above 470,000, which is a sign that the economy is still in a lot of trouble,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for October delivery fell 57 cents, or 0.8 percent, to $73.34 a barrel at 9:07 a.m. on the New York Mercantile Exchange.

Brent crude oil for October settlement lost 94 cents, or 1.2 percent, to $75.41 a barrel on the London based ICE Futures Europe Exchange. The increase in crude oil stockpiles left supplies 11 percent above the five year average for the period, according to the department. “U.S. inventories are pretty enormous,” said Alexander Ridgers, head of commodities at London based CMC Markets, which handles more than $150 million a day in U.S. crude contracts.

Overall petroleum stockpiles, a combination of oil and fuel supplies, climbed 4.04 million barrels, or 0.4 percent, to 1.14 billion, the highest level since at least 1990, according to yesterday’s report. “Supplies are ample,” McGillian said. “Yesterday’s inventory report showed that petroleum stockpiles were at a record high for a third consecutive week.”

Reporter Mark Shenk can be reached at mshenk1@bloomberg.net

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