Oil Prices Rise on Stronger-Than-Expected Jobs Data
By Sebastian Pellejero
Oil prices rose Thursday after employment data showed the U.S.
economy gained more jobs than expected last month.
U.S. crude futures for August delivery added 1.7% to $40.45 a
barrel on the New York Mercantile Exchange, putting them on target
for their highest closing price since March 6.
Prices edged higher after Labor Department data showed the U.S.
added 4.8 million jobs in June, bringing the unemployment rate down
to 11.1%. That increase was larger than economists surveyed by The
Wall Street Journal expected.
Oil investors said Thursday's strong employment report was a
sign that the U.S. economy is recovering from the pandemic, despite
a recent climb in cases. Recent data has indicated that the
recovery could be slowing down, a concerning development for those
betting on surging demand for crude.
Recovering demand and record production cuts by the Organization
of the Petroleum Exporting Countries and its allies have helped
return prices to their March levels. Still, stockpiles remain
elevated after surging during the spring, and analysts are
skeptical that demand will return to its pre-pandemic levels,
especially as cases in big states like Texas, Florida and
California continue to rise.
In the U.S., crude stockpiles have started to come down. On
Wednesday, weekly U.S. data showed crude inventories had fallen by
7.2 million barrels last week, a much bigger drop than the
100,000-barrel decline traders and analysts surveyed by The Wall
Street Journal expected.
Analysts at Goldman Sachs said that oil demand could reach
pre-coronavirus levels by 2022, driven by growth in emerging
economies, relatively low energy prices and rising sales of
petrochemicals. Others, however, are less optimistic.
"Future [oil] demand growth could be weaker than before [the
coronavirus]," due to less flying and more working from home, said
Citigroup analysts in a note.
Meanwhile the number of rigs drilling for oil, a proxy for
sector activity, declined in June. Oil rigs in operation world-wide
fell by 103 last month to 1,073, according to data released
Thursday by Baker Hughes. In the U.S., the oil-rig count was down
72 in June to 274.
Brent crude futures for September delivery, the global gauge of
oil prices, jumped 0.9% to $42.42 barrel on the Intercontinental
Elsewhere in commodities, most actively traded gold futures
recovered some of Wednesday's losses, rising 0.5% to $1,788.50.
Earlier in the week, gold futures breached $1,800, the highest
level in almost nine years, as investors flock to the haven metal
amid economic uncertainty and low interest rates on government
Write to Sebastian Pellejero at email@example.com
(END) Dow Jones Newswires
July 02, 2020 12:00 ET (16:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.