Crude oil futures extend retreat in the wake of weak US job report

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Crude oil prices continued to fall in Asia’s mid-morning trade on Sept. 6 as weaker-than-expected US jobs report raised near-term demand concerns. 

The ICE, November Brent futures contract, was down 99 cents (1.36 percent) from its previous closing of $71.62/b at 10:49 a.m. Singapore time (0249 GMT), while the NYMEX October light sweet crude jobs contract was down 91 cents (1.31 percent) at $68.38/b. 

Both indicators fell after US Department of Labour data issued late September 3 showed nonfarm payrolls increased by 235,000 jobs in August, down dramatically from 1.05 million in July and considerably below market estimates of the growth of more than 700,000. 

I think sentiments are largely following through from the US August jobs report, which underperformed expectations by a wide margin,” IG stock market strategist Yeap Jun Rong told S&P Global Platts Sept. 6. “This highlights that COVID-19 is having a larger near-term impact on recovery than many expected.” 

According to ANZ Research analysts, the reduction in US hiring aroused fears that the delta variant was having an influence on the US economy, which would eventually affect demand. 

Meanwhile, in the aftermath of Hurricane Ida, producers in the Gulf of Mexico were working to restore production capacity. While operations were mostly unaffected by the hurricane, analysts say there has been a little recovery in the Gulf of Mexico’s oil output. 

On September 3, the US Bureau of Safety and Environmental Enforcement stated that 82.72 percent of Gulf of Mexico crude output was still down, down from 85.89 percent on September 5. “A supporting factor for crude oil this week would be the carry-over effects of supply destruction caused by Hurricane Ida and may keep prices elevated over the week,” Philip Futures analysts said in a note on Sept. 6. 

With 1.7 million b/d of offshore production yet to come back on stream. Most of Louisiana’s refining industry was debilitated by flooding, they added that US crude and product stockpiles were expected to fall. 

Source: S&P Global 

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